By Londiwe Buthelezi for Fin24
The owner of Sandton City says footfall at the country’s premier shopping centre recovered to 87% of pre-lockdown levels on weekends in October.
Its other big malls, such as Eastgate in the East Rand and Liberty Midlands Mall in Pietermaritzburg are recording more customer visits on weekends than they did before the lockdown.
And what have people been frequenting the malls for? Looking at retailers’ turnover in Liberty Two Degrees’ malls, they have been shopping for luxury and tech goods, as well as more obvious grocery and supermarket items.
In fact, luxury brands contributed 8.1% towards total turnover at L2D malls even though they only account for less than 1% of mall space. The rapid recovery in demand for luxury brands is defying expectations in a country where over 43% of people are now unemployed if you include discouraged jobseekers after 2.2 million more people lost their jobs in the third quarter.
But a 10 point improvement in consumer confidence in the three months to end-September – after it reached a 33-year low in June as shown by the FNB/BER Consumer Confidence Index – was perhaps a telling sign that those who still have the ability to spend will gradually go back to their shopping habits.
L2D said the recovery for luxury brands was driven by domestic demand.
But while people are out shopping for luxury items again, they aren’t yet flocking to hotels. L2D said the Sandton Sun hotel is currently the only hotel in its portfolio that is operational. But its occupancy rate still stood at 30.9% in September, 10 percentage points above the 20.9% recorded in August.
The Sandton Intercontinental Towers, Garden Court and the Convention Centre have been closed since March 2020. But it’s not only hotels that are giving L2D a headache. The company said vacancies across its property portfolio increased again from 6.1% in August 2020 to 7.6% in October. Office vacancies increased to 15.1% by the end of October 2020, with Melrose Arch being the most affected.
“The effects of Covid-19 continue to drive the downsizing of office space,” wrote L2D in a trading update released on Friday.
The retail vacancy rate also continued to increase with Eastgate Mall being the largest contributor. But the company said its team had secured leases for further 900 square metres of space, which will reduce the Eastgate’s vacancy from 7.0% to 6.3% in the fourth quarter.
Image credit: Michael Turner
The rand has staged a remarkable recovery, gaining almost 200c against the dollar. It has bounced back from R19/$ in April to R16,61 as of Tuesday.
Here are five drivers pushing the rand from Covid-19 doldrums:
- Quantitative easing – this occurs where central banks introduce new money into the money supply chain to support an economy. There has been a large volume of QE pumped into the system, which has seen financial markets increasingly look to invest into higher yielding assets, and with emerging market portfolio assets gaining from this investment flow, so emerging market currencies continue to strengthen substantially, she said.
- US dollar weakness – the greenback is on the back foot currently and emerging market currencies like the rand are benefiting from the weakness.
- Attractive yields – the rand is still attractive to yield-seekers. Many developed markets in the world have interest rates at zero or close to zero, investors worldwide are seeking yield. Despite our recent interest rate cuts, South Africa still offers some yield, which has helped the ZAR as the risk sentiment returned.
- Positive moves on all the major equity indices – markets priced in a post-Covid-19 recovery have spurred on emerging market currencies, including the rand. As a commodity currency, the rand also benefited from strong metals prices. Commodity currencies are up by around 4% month-on-month, which show greater gains over June to date than in May.
- Improving global financial market sentiment – the market is positive on prospects for global economic recovery.
The rand eased in early trade on Tuesday, relinquishing some of the gains it notched up in a previous session on news that the ruling political party, the ANC was deciding whether to cut short president Jacob Zuma’s tenure as head of state.
According to a report by Reuters, the currency is expected to trade in the range of R12.00 to R12.25 on Wednesday, after it eased off its highs against the dollar during European trade on Monday.
The currency is tracking a wave of positive sentiment following the appointment of deputy president Cyril Ramaphosa, as ANC leader in December, while the ruling party’s top leadership has also decided that Zuma must leave office, with speculation about the timing.
Ramaphosa is expected to adopt more business-friendly policies, even though he enjoys the support of the communist party and the biggest labor union federation. His election as ANC leader helped boost the rand 10% last month.
At 09h55 on Tuesday, the rand softened against the dollar, but firmed against the pound and the euro:
• Dollar/Rand: R12.09 0.33%
• Pound/Rand: R16.90 -0.13%
• Euro/Rand: R14.83 -1.43%
A report by The Guardian late on Monday reiterated that plans are in place to oust Zuma within the next two weeks, despite comments from secretary general Ace Magashule that NEC had not yet made a decision on the future of the current president.
Investec Bank economist Annabel Bishop said in a note at the start of the week that the rand could strengthen to as much as R11 to the dollar, should the president be forced to step down.
Further strengthening would also cause fuel price cuts and place downward pressure on inflation, with the possibility of the rand moving towards R10 to the dollar should Ramaphosa continue to make reforms and promote growth, she said.
Bloomberg market analyst Robert Brand also remained positive on the currency, stating that it was possible for Ramaphosa to continue the rally by continuing to clamp down on corrupt state-owned enterprises such as Eskom, and possibly even move away from some of the ANC’s more populist ideas (such as land reform) so as to encourage continued foreign investment.
Edcon has released a statement to trading partners to update relevant stakeholders on the latest developments relating to activities and events underway within the group.
The group has redefined roles and responsibilities at head office, with Andrew Levermore assuming the position of COO.
The group is reshaping the capital restructure to support long term growth and reduce the debt. In the past year, Edcon has reduced its debt by R4,5-billion and cash interest burden by R1-billion. Debt maturities have also been extended to December 2017.
Edcon is in the process of closing certain stores while opening new outlets. Approximately 60 new stores will be opened in the next two years, including numerous group store concepts in the 131 000 square metre Mall of Africa.
Two men have been arrested for stealing R3-million worth of goods, including printer cartridges.