February 6, 2026 • 40 mins
Stephen Grootes speaks to Isaah Mhlanga, Chief Economist and Head of Research at RMB about the landmark trade agreement between South Africa and China that grants South African exports duty-free access to the Chinese market, at a time of growing uncertainty around the future of AGOA.
In other interviews, Luxity co‑founder Michael Zahariev unpacks Luxity's 2026 State of the Luxury Market Africa report’s findings, exploring how South Africa’s luxury market is maturing as consumers prioritise long‑term value, pre‑owned access and more considered expressions of status.
The Money Show is a podcast hosted by well-known journalist and radio presenter, Stephen Grootes. He explores the latest economic trends, business developments, investment opportunities, and personal finance strategies. Each episode features engaging conversations with top newsmakers, industry experts, financial advisors, entrepreneurs, and politicians, offering you thought-provoking insights to navigate the ever-changing financial landscape.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
And now The Money Show with Stephen credits on seven
oh two. Let's walk at all. The Money Show with
Stephen Crutis is brought to you by abs of corporate
and investment banking, balancing economic growth with ecosystems. That's how
they're invested in your story. Good evening, Welcome to the
Friday edition of The Money Show. Eight minutes after six.
I'm Stephen Curtis. Still quite a lot going on one
(00:24):
or two updates. Does look like markets are feeling a
little bit more positive than they were yesterday, but it
has been such a sort of up and down week
it's really hard to say. I think people still looking
for a little bit of direction. Obviously, the big story
today the big Chinese trade deal that we've signed. We
get duty free access pretty much, it seems to their
whole market. The question for me, of course, is what
(00:46):
about the reverse and what happens if you do have
complete nuttered duty free access between the two and you
have a big economy and a small economy. Who wins
and who loses? I do have a concern. I won't lie,
but as Ion Plunger knows a lot more about these
things than I do, and I'm hoping he'll put my
mind at rest. He's the chief economist and head of
research at R and B. We'll hear from him in
(01:07):
just a moment. I noticed this week it was sort
of pointed out to me, and I'm very grateful to
the person who pointed it out that some of our
banks are buying shares in each other. It was a
couple of transactions this week and thought might just investigate
that little bit of further Cookie Quoiman as the banking
unlest danker capital. It sort of goes to how all
of our banks are kind of into LinkedIn. On one level,
(01:29):
that's a very good thing. It means they sort of
look after each other and that does bring more stability.
I know, if our conspiracy theorist or you know, a
member of a radical political party or something, our child conspiracy,
and maybe we should look into that. But I kind
of just feel that actually for the system, the good
of the system, stability is all when it comes to banking,
and that's very important. I don't know if you have
(01:52):
been able to spend much money on luxury over the
last little while, and I mean, you know, top of
the range handbags, things like that. A new luxury report
from Laxity suggesting wallets are just out completely. I've never
really spent money on a Wallas. I also don't know
what I'll do with the wallet now. I mean, I
have one, but it kind of doesn't really live on
me because everything's now on your phone. The only thing
(02:14):
you have to carry on you is still your driver's
license card. I mean, come on, surely time to have
that on your phone. But otherwise I don't know really
what I'd use a wallet for. I do carry cash,
and now I do keep it in a safe place,
but I don't have it on me most of the time.
We'll talk a little bit about that change. And then
also it seems that there's some differences between what people
(02:35):
in Cape Town are buying and some people in joe
Burg are buying. Don't forget the Friday Biz Blitz as
well before seven o'clock. Good to hear from you seven
two seven oh two one seven oh two Voice notes
on Double one, Double A three oh seven two and
two one four four, six, five six seven The Lanly
Show with Stephen Kruts Live on ninety two point seven
(02:56):
and one six f M, streaming on the Prime Media
Plus Now and DStv channel eight five six. You would
have heard in the EWN News bulletin with pulling the
report from Cape Town about the SABC meeting in Parliament today.
This is a meeting of a Portfolio Committee on Communications.
They were meeting to speak to the Communications Minister, Soli
(03:16):
Malatti about the new funding model that's being proposed for
the SABC. Now I know nothing about the funding model
because the meeting, it seems, was closed to the public
and I have so many questions about this. Firstly, Parliament
has to be in the open. That's not me saying
that that's the law. By the way, Parliament has to
be in the open. You can't just because you don't
(03:38):
like this, or you worried about that, or commercial this.
It has to be in the open. I am not
convinced that the decision to keep a meeting like that
closed would actually survive a court case. I wonder if
maybe you have to have it open. Secondly, you're making
the mistake of thinking it's your SABC. It's not. It
is our SABC. It is the public, not the state,
(04:00):
the public broadcaster, and that means that everybody, including us,
we need to know what is going on around the
SABC and what government intends to do about it and
how they're going to fix it. Now if things are
sensitive and you want to keep it a secret in
South Africa, good luck to you.
Speaker 2 (04:19):
But that's on the.
Speaker 1 (04:24):
Money shows six to eight pm. Well, a big announcement
last night by the DTIC Minister Parkstow. He signed that
framework agreement with China that will get our companies duty
free access to Chinese markets by the end of March.
As I'm Clung as the chief economists head of research
at R and B as I good evening, so good
to have you again. China is a big market. I
(04:46):
mean this is a big deal for some of our companies.
Speaker 3 (04:50):
Indeed, China is a big market, you know, a big
opportunity to send a lot of our products into the
Chinese markets. But you know it also comes with some risks,
you know, the idea that it is big. A lot
of the essuyes are states supported, which means they have scalability,
(05:12):
they're a lot more efficient. It means they can send
products to the South Afgan market a lot more easier
as well. So we are opening up to new trade.
Other news, but we are going to be recipients of
other products that come into our own economy from China
which domestic companies might not be able to compete with.
(05:35):
The Automotive sector is an example. We have seen a
lot of inflows of Chinese you know, manufactured cars that
are coming to the South African market that are much cheaper,
which have displaced in terms of market share the traditional
OEMs that have been operating the South African market for
(05:55):
for for a while. So there are opportunities and risks
depending on how the trade deals are structured.
Speaker 1 (06:02):
So this is the thing. We don't know the details,
we haven't seen it yet, but presumably, and this is
a big if because I don't think it's going to
be like this, But if it's completely open access both ways,
I mean, we'll sell a lot more lemons in China
as an example, We'll sell a lot more farming, farming, producer,
mining products, but we will probably lose our car industry.
(06:25):
I mean, would it be as bad as that if
that's what it is.
Speaker 3 (06:29):
Yeah, Look, I think that's the risk that you're highlighting
is you know, you're highlighting it correctly, given that we
sell to a largely expand commodity cheese that is mining
commodities is agricultural commodities. From a manufacturing perspective, we're very
little to offer China that they can produce for themselves,
and they have a lot more to offer what we
(06:49):
can produce here. But given in that case, the automotive
companies try in the domestic economy are not South Africa.
We are simple, yes, we you know, manfacture some but
a large extent we are a collings to it for
an I mean for an export market. So we just
have to think through what are the implications in the
(07:11):
job market, What are the implications for the you know,
small manufacturing best that have built so far.
Speaker 4 (07:18):
But there is a way where you know.
Speaker 3 (07:20):
If police Americans can think about domesticating that manufacturing capability
in the South African economy to preserve jobs, that's one,
but more importantly to bring the technical know how into
the South African manufacturing sector, that will be a better deal.
Speaker 1 (07:37):
What safeguards do you think would be important? As I say,
we haven't read the agreement yet, it hasn't been made public,
but I presume something for the car industry. Maybe still
considering that, you know, we understand the id C is
in a in negotiations with Arsenal Misselle. We were reminded
of that yesterday. What would there be other areas that
(07:58):
maybe we would need to be able to say to
the Chinese, look, this is special to us. We need
to protect it.
Speaker 3 (08:04):
So catering those agreements, who have to take into account
and the social dynamics locally, the job environment locally, and
also you know, the manufacturing capability locally because if that
is displaced, we will industrialize a lot more than what
we have currently. And of course to your point, there's
still there's still sector is it is an important sector
(08:27):
that can benefit you know, other sectors beyond just itself
and the manufacturing sector. So we need to preserve that
capability locally. But that requires energy, you know a lot
of energy that is cheaper, which means it is to
be combined with an energy policy that is conclureent to
a manufacturing sector policy that you know that can build
(08:50):
or rebuild our manufacturing capability for industrialization. So we have
to consider all of that. I think it's still too
aaily now how to try and have a view on
how this trade agreement is going to look like. They
are still in negotiations and we hope in those negotiations
that will take into account the needs of the South
(09:13):
African economy as they open up the Chinese economy for
South African products.
Speaker 1 (09:18):
Is it always the case that if one big economy
has an open access trade deal with a smaller economy,
so the term of exactly the same access to each
other's economies. I mean, my gut sort of wants to
say the big one always wins. Is that the case?
Speaker 3 (09:35):
It's not always the case. There are instances where you
have a transfer of technology to the smaller economy such
that it drives much more than it used to be
before the trade deal. It all depends on what the
policy makers negotiate and what is you know that which
they're going to agree to in the sectors which are
(09:56):
quite important for the South African economy. So it's not
a foregoing conglusion that will be on a net negative
depending on how we structure it. Where do we want
to gain If we could gain from a technology and
capability transfer perspective into the domestic economy, that would benefit
South Africa long term, But it needs careful considerations or
(10:19):
hopefully the policy makers are going to take into account
the needs of the South African economy to re industrial lies.
They're the best that we can use to export into
the larger continent under the Africa Frequenttender Agreement.
Speaker 1 (10:34):
As I am planker, thank you so much, so much
to think about. Chief Economists and head of Research at
R and B. Nineteen minutes after six the Money Show
explain that the last couple of weeks, they've been a
few interesting transactions involving our banks and their relationships to
each other. I'm supposed to simplify at Standard Bank now
owns six percent of investing, Standard Bank owns five percent
(10:56):
of netbank. African Bank is twenty five percent earned by
con him of the big five banks. Why on earth
there our banks buying into each other? Cookie Cooman is
the banking and listed Thank you capital Cookie, good evening,
Thanks so much for the time. I mean, why do
our banks want to own bits of each other?
Speaker 4 (11:13):
By Steve and you are a good introduction, but we
was the first separate two issues. Number one, the five
and six percenters that you refer to Sound Bank owning
of in their steck and et cetera. Those are shareholdings
via their pension funds or unit trusts. Maybe that they
(11:36):
manage so remember the bank doesn't own those shares and
it actually has no say over any decisions regarding those shares.
The members of the pension funds own that and there
are managers and trustees who make sure that there's a
ducial duty towards those pension fund members are is correctly
(12:00):
separated from the bank's wishes. So the Standard Bank would
have no influence whatsoever on any vote or any decision
that it's holdings in Investec via Expansion Fund is made.
The second one is different, and that is in this
case is the holding in African Bank. And whether we
(12:23):
can talk a third one just now as well, like
net Bank who owned twenty percent in Eco Bank, and
now I bought to sixty five percent stake in a
bank in Uganda, But the African Bank one was a
bank that actually got into trouble, was collapsing, and I
think was a ten years before that. Ruckly, we had
the same ensemble where you know, the bank had a
(12:48):
run on deposits, which is always your biggest fear in banking.
And when your deposits start feeing, the central bank has
to step in because and that's the whole system of banking.
It's actually banking works on the premise that deposit ninety
depositors need the money at the bank, so the depositors
(13:08):
can often have shortened deposits with the bank, but the
lending the duration of the lending is much longer than
that of the deposits. So when when more than it's
five percent of depositors with draw their money, a bank
cannot actually fund them and the central bank has to
step in and in the end the taxpayer has to
make good. So okay, African Bank was a good example
(13:29):
where the Minister Finance gets involved, the central bank gets
involved and they work out a transaction to save the bank,
to stabilize the whole system. Because the older reading listeners
might still remember what happened when when Soombo started going thereafter,
Bank of Boe wasn't Bank of the East was at risk.
(13:55):
Net Bank was at risk. Because it spreads up the line,
people start getting worried and then someone has to step
into say I've got big pockets, don't worry, your deposits
are safe. Okay. African Bank is held by the various
banks because at that stage the arrangement was made that
it's better that those shares are placed so that all
have an interest in making sure African banks survived which
(14:17):
are dead. And so now that it's listed, I think
there's a lock up period, but gradually they will sell
those banks back onto the other shares back into the market.
Speaker 1 (14:26):
Again, Okay, does that raise I mean, I mean the
shareholdings are relatively small. I'm so curious as to why
the pension fund of Standard Bank would buy into what
is sensibly a competitor.
Speaker 4 (14:39):
Okay, it's remember, as I said, it's a separate entity,
separate from the bank. So they're all invest in what
they're but also what we tend to forget, how the
JS shrunk. You will sort of remember was it fifteen
years ago where the pricess was called public in the newspapers.
(15:01):
You add up to three pages of shareholdings and now
it's basically I think it's it's less than one hundred
of larger shares. So the share, the number of shares
of shrunk, and the number of larger liquid shares of
shrunk as well. And so almost by default, any large
(15:21):
pension fund and any large unit trust or by default
have to own almost everything in the economy, and by
default it will be a fairly sizable. So Standard Bank's
pension fund, which I think just logically it would because
of the biggest bank, bigger number of shells, would be
one of the largest extensions on bigger than that of netbank.
(15:44):
It would have a larger share of of ownership in
other banks. And obviously whoever that management of that son
has been outsourced to might decide it life's netbank because
or investigate those case investics. Price to ind turn on
capital is very cheap, so obviously they've been taking a
(16:05):
bigger investment in let's say, Investeck rather than whatever capitech,
which is very expensive. But those will be the decisions
of the the time manager of the pension fund.
Speaker 1 (16:20):
Does it matter that our banking industry can look all
quite interconnected? I mean, on one level, it makes me think, well,
they all, for various reasons, kind of are slightly interconnected,
but they're still healthy competition. I can't see how you
couldn't say that. On another level, if I were a
conspiracy theorist and cooky I help my moments later on
(16:40):
a Friday, look at all the bankers and I'm like,
you're all in it together.
Speaker 4 (16:46):
Oh look, I think it was a ticket bar article
in the newspaper which said that Standard Bank has a
stake invest Tech, and people mediately sort of thinking, oh,
and look on the two sides of the story. On
the one hand, for the consolidation of our bank sector,
(17:07):
and you saw that in Australia and in Canada and
a few other countries is actually healthy because it leads
to more efficiency. But then it leads to less competition.
So there are many voices, and I think correctly say
the same reserve bank will actually increase the number of competitors.
But more competitors also mean more risk of them defaulting
(17:29):
like Assemble or African Bank dead. So your control must
be and your bank supervision must be very good. But
generally our bank sector is very competitive. Trust me. I
speak to them regularly, and you know, but it is
true that the banks will always be on the lookout
for a weak competitor, and you know, like the smaller
(17:51):
banks netbank and in the respect, I'm sure regularly the
boards or the exec teams of the other banks say
should we think of buying investor should you think of
buying netbanks because they're smaller? Or someone? Now did they
die up with the Time bank? But I think because
that is a low growth economy at the moment. We
(18:12):
hope that changes, but that means that the only benefit
of taking out a competitor is to get efficiencies, and
that means you've got to lay up staff, you've got
a close branches. Competition. Commission won't like that. It's hard work,
and that's why you find most of the Salatican banks,
in fact, all of them have been focusing more on
(18:34):
doing acquisitions in Africa. And I think that's why the
African countries are growing faster than ours at the moment,
and they can do a technology and expertise transfer. It's
not as competitive there and those are growing economy, and
I think so you'll see SA banks continuing to rather
(18:55):
grow their footprint in Africa rather than increasing the level
of competition here in South Africa.
Speaker 1 (19:04):
Goky GOI man, thank you so much, really to appreciate it.
Banking analyst at den Care Capital. Right. I think that's
been explained certainly to me. Twenty seven minutes after six
the Money Show, Grant Natives Portfolio Manager be Guerla Global
Fund Managers Grant Good Evening Harmony. Yes, of course we
expect their earnings to be well, you know, over one
hundred percent more because of the gold price. But quite
(19:26):
a nice production update.
Speaker 5 (19:29):
Yeah, nice update, and they had some operational disruption in
the second quarter. So the fact that they on tack
to meet their full your guidance, I think is very encouraging.
So you know, we don't want to see them not
taking advantage of this opportunity. I mean this gold price,
as we know, near record levels. It's a fantastic opportunity
for our miners, for our fiscus. So good to see
that production stability. And I do know that the costs
(19:52):
for answer all in sustaining costs are creeping up. It's
a problem across the industry, and so it does it
does tend to I think it's formal a higher base
for future gold price. And I don't think we're ever
going to see some of those levels we saw again
back in the two thousand and below level, but we
will see.
Speaker 1 (20:10):
Yeah, interesting news overnight the sort of deal, the proposed
deal between glen Core and Rio Tinto it's been called off.
Was that just too much ego? Does it not make
economic sense?
Speaker 5 (20:23):
Look, I think the economic rational makes sense. There's a
good fit between the portfolios. Rio needs what Glencore has
and Glencore could do with the scale and whatnot that
Rio brings. But you know, you have got Glencre which
is a sort of a founder and well it's not
a founder run business, but it's very much a nontroprimurial business.
Rio is very much a corporate Glencore and Rio's both
(20:43):
have very distinct cultures. Remember you know, glen Call run
by South Africans, by VIZ graduates cas from VITZ and
there's a lot of them working in the company. Is
a very clear culture, and I think it's important to
them to sustain that. But I will say that glen
Core it's not significantly worse off without it. They have
a very good portfolio of metals, and I think they're
(21:06):
well positioned for some of the future demand around copper,
cobalt and some of the new new metals so to speak.
Speaker 4 (21:14):
So I think I'll be fine.
Speaker 5 (21:15):
I'm wondering to myself, does HP turn around and have
a look at glen Corn now, because they've got the
copper gem that everyone's looking for. Didn't work with Rios
and they missed Anglers, so maybe they're on the table
for Billiton. It's be interesting to watch that space.
Speaker 1 (21:29):
I mean a whole shakeout in the metal sector that
we've seen over the week. I mean, quite traumatic in
a way, very volatile. I mean, I don't know, I
don't really see an enter it for the meantime, and
I mean it seems that the market is still quite
vulnerable to rarely this kind of thing for a while.
Speaker 5 (21:46):
Yeah, I think we should expect it, given the kind
of moves we've seen and the speed of the moves.
They're inevitably attracts a lot of speculative positioning, a lot
of fast money. And then when you have that kind
of environment, the moves of top both up and down,
and you get margin calls, you know they've been pushing
up margin to sort of manage the speculation. Then you
(22:08):
see further forth selling. So I think the volatility is
here to stay, as you say, and it's probably part
of a healthy, hopefully consolidation phase from our perspectives. But
I don't think it's changed the fundamentals or the underlying
drivers are, especially with regard to gold.
Speaker 1 (22:25):
Thank you very much. Indeed, Grant Nada as portfolio manager
being Wuella Global fund managers really appreciate it. Just on
sixth thirty, The Money Show with Stephen on seven O
two seven O two. Well Hews today that Discovery, the
financial group, has decided to spend four billion round buying
its own headquarters in santon It was fifty five percent
(22:47):
owned by Growth point forty five percent owned by another group,
and essentially Discovery is saying, look, we'll own our own headquarters.
It does make sense. Among many other things it's been
pointed out several times today is that this looks like
quite a big vote of confidence in Santain. If you
have a landlord, you would be able to, you know,
give notice even a couple of years notice and move out,
(23:08):
and Discovery are clearly saying, well, we are staying here,
which is interesting because Santurn still has some of the
most expensive commercial property, or really does have the most
expensive commercial property in the country. And from time to
time someone will make a comment about satin All this,
all that, but just the last couple of days, if
you look at the sheer amount of traffic going into
(23:31):
Santin in the morning, and I sometimes drive against it
because you know, from three o'clock people start to leave
sentin as they go home or fetch children or whatever
it is. At the end of the day, certainly that
traffic is going nowhere. I mean that in both ways.
One it's going to keep getting stuck in Santain, and
two most of the time it's not really moving. The
(23:53):
point is that traffic doesn't lie. Traffic tells you how
strong sentence still seems to be at the moment. If
I were owning land and centered, if someone offered me
a piece and I had four billion round, that might
actually be a very very wise investment for the future.
Your thoughts seven two seven two one seven o two
(24:14):
show the Friday File. The Friday File seventeen minutes now
to seven the time well Amid claims that more and
more of us are still stuck in debt. To report
out about the business of luxury. That suggests some of
the bigger, more conspicuous, more obvious luxury brands maybe aren't
doing as well as they did what it's also seemed
(24:35):
to really not be doing very well at all. The
report comes from Luxity. It's the store, the group that
resells luxury items. Michael Zaharrev is the co founder of Luxity.
Michael good evening, good to chat again. I mean, what
are you finding is changing in the market? I mean
clearly handbags are still in but what people are interested
(24:55):
in handbags does seem to be changing.
Speaker 2 (24:59):
Yes, thank you for having me again on the show,
and exactly what you're saying. The market is definitely evolving.
In fact, this is one of the years where we've
seen the greatest evolution. In general, the luxury market has
been booming for the last five years, and the Clear
Shopping Index report this year actually showed that the new
(25:20):
luxury market has contracted just one percent, so very flat there.
Luxity representative of the pre owned market at the same time,
has grown twenty seven percent over the same period, so
we can see that consumers are definitely buying into this
pre owned trend number one, and more importantly, the taste
of consumers are shifting. Traditionally, we saw that consumers were
(25:42):
really gravitating to more the affordable items shoes, wallets, the
goods under ten thousand rand in terms of affordability for
the luxury industry because we're kind of an entry point.
But this year, surprisingly, what we're seeing is consumers are
gravitating more and more towards jewelery and handbags, which are
(26:03):
much more expensive. And the reason for this that we
can the juice is due to their resale value being
much higher. So we're seeing the rise of what we
call the trendy, the streets consumer. You know, someone who's
doing research and really understanding what's going to resell later
and have greater value.
Speaker 1 (26:22):
So I mean there's also maybe, you know, for something
under ten thousand rand, you walk past the shop window,
you walk past it again, it catches your eye again.
It's not so much a sort of instinct purchase or
an impulse purchase, but maybe in the course of a
week you've taken the decision to buy it for something
bigger than that luxury handbag. You're looking at resale values,
(26:43):
you're doing some serious research beforehand, You're taking a lot
more time over the decision exactly.
Speaker 2 (26:49):
And that's what's happening. Customers are not only taking time
to see, you know, can I afford it, but they're
also starting to understand what is it going to resell for.
So traditionally, if we look at the most popular brand
in South Africa, Groucci and Louis Verton were really the heavyweights.
They were making up one third of searchers on our website,
and this is across hundreds of thousands of searchers a month,
(27:12):
so they were making up one third of all of
the search traffic. Now this year is the first year
they've dropped, and they've dropped substantially down to just twenty percent.
And smaller brands, particularly brands that hold their resale value
more have started to materialize. So brands like Rolex, brands
like a Mares, brands like Chanel, those really hold their
(27:33):
resale value and that's what the consumers starting to buy into.
So I think it speaks to this narrative that the
consumer is not only looking for what's popular, but they're
also looking more from an investment mindset, where I want
to make sure I'm making a purchase that can give
me some kind of a return or at least I
would lose so much if I'm looking to sell it
(27:54):
back into the future.
Speaker 1 (27:56):
How important is it for people to know what it
is that you have? And I mean this gets quite complicated.
There are people who spend hours looking at what websites
and you know what did Johann what's his name? You
know who? I mean, where today and that kind of thing.
I mean, I find that a bit bizarre in a way,
(28:16):
but I can understand the interest does what you were
wearing still sort of attract people to particular brands.
Speaker 2 (28:24):
I think so. So South Africa has a very aspirational
culture and it's quite different to the Western world. So
I think in the West, you know, they gravitate very
much to celebrities and trends, whereas in South Africa we
found that the consumer generally gravitates multi status. So it
wasn't so much you know, what is X, Y and
Z and celebrity wearing, but it was more about when
(28:45):
I'm wearing this brand, I want to make sure that
it's very obvious. I want to make sure that everyone
can recognize that it's a Louis Vuitton or a Gucci.
So generally speaking, the louder brand performed far better in
South Africa than what we're seeing in the western, more
established markets. However, this trend is also starting to change
more and more, where we're seeing some of the quieter
(29:08):
brands growing at a faster rate than some of them
louder brands. So I think that speaks to a mature
in consumer But overall, in South Africa, definitely, you know,
the louder, flashier brands hold the largest sway of the
market or more popular are more popular amount the consumers.
Speaker 1 (29:26):
A quieter brand, I put that in inverted comments carries
its own power because it's kind of suggesting that I'm
more discerning, isn't it. I mean it doesn't it say
I don't need to show off, but you're showing off
that you don't need to show off.
Speaker 2 (29:42):
Yes, I think so it holds. It holds a value
to a certain segment of the market, which is you know,
a lot more of you know, they focus on the heritage.
It's more generational wealth. You know, it's not just this,
you know what we call old money versus new money.
And the interest thing actually is last year we did
a report on you know, Cape Town verus Johannesburg, and
(30:06):
what we actually found is Johannesburg was gravitating a lot
more to louder brands than Cape Town and in general,
although people in Johannesburg and Halteng region at least were
purchasing a lot more frequently in terms of items, they
were purchasing lower value items, whereas the Capetonians or Western
Cape in general was purchasing more expensive items and more
(30:28):
from the quieter brands. So I think it speaks to
you know the difference of the cities and the makeup
of the demographics, and you know the economies, et cetera.
Speaker 1 (30:39):
Is there a kind of older money thing in Cape Town? Maybe?
Speaker 2 (30:43):
Well, I mean the data seems to suggest that, at
least from a preference point of view, Like I mentioned,
the Western societies, generally, the the move is more to
the stuff wealth and the younger generations or your first
purchase with the more of these more flashier brand. South
Africa certainly the dominating the searchers are for more flashy items.
(31:05):
When we look even within the brand, the items that
are within each brand are the louder ones. So it
suggests that in South Africa the market is more tuned
to that new money kind of culture. But in the
Western Cape at least, that that shift isn't as prominent
as it is in how.
Speaker 1 (31:22):
Tech consumers change as they get older, right, I mean,
it must be interesting to sort of I don't know
if you're able to keep this kind of data, you know,
the age of a customer. I mean, you're not going
to ask them how all they are the checkout, well
I hope not, and sort of see what they're buying
as opposed to what a younger person is buying. So
someone coming into your stores for the first time, first
luxury purchase, probably not going to be something very expensive,
(31:45):
just going to get a taste for it, but you know,
something they want to do with their brand and then
sort of you know, go from there and kind of
mature as a customer into luxury if they stay in
that income bracket. I mean, you must see customers coming
back and changing as they do.
Speaker 2 (32:00):
That certainly, but I think there are some you know,
intricacies there, especially when we're talking about South Africa. So
in South Africa, you really have a much smaller age
band of consumer because the goods are relatively much more
expensive versus our earning capacity. So what we see in
(32:21):
South Africa is, you know, the consumer really starts around
thirty five generally and then goes up to you know,
around sixty for the majority of the consumers. And so
that's a much tighter age like age band than we're
seeing when we look at the Western data, which you
know starts even at eighteen years old for the pre
owned segment. But within that age band, definitely there are
(32:42):
some changes, but the majority of the consumers are currently
coming in in that like thirty five to three five segment,
so that's the dominant part of the market. What is interesting, however,
is how we've seen the market evolve in terms of
pre owned. Five years ago, there was this very very
specific split between those who were buying and those who
(33:04):
were selling. However, nowadays it's very mixed. So we have people,
we have consumers that are essentially you know, unlimited wealth,
ultra high network with individuals that could purchase anything new,
but they're still choosing to buy pre owned more and
more because of sustainability and also because of access to
limited edition items or items not available in South Africa.
(33:28):
So there's definitely a shift in terms of the mentality
overall more towards this idea of commercializing pre owned and
in jewelry.
Speaker 1 (33:37):
Obviously the gold prices you know, sold through the roof,
has that had any impact on what people are actually buying?
Do people maybe want to be seen in a bit
of gold? Was that not really done well?
Speaker 2 (33:48):
I don't think it's materialized yet in the pre owned market.
I think because we're selling brands, the brands essentially are
updating their prices, you know, twice a year, so there's
gold prices have certainly been spiking, but because we have
kind of a lag effect in terms of the price adjustment,
it hasn't come through to the pre owned market yet,
(34:10):
but certainly in the next year or half a year,
that's really going to start making a big impact on
the new market and immediately on the pre owned market.
So I think there's a great value in that. And
actually jewelry interest in jury, or at least jewelry sales
were up forty seven percent in the last year, which
was the record for any category across all the categories
(34:31):
we serve. So certainly consumers are moving more and more
into jewelry, and that's likely because they're seeing it more
as an asset purchase than just a fashion trend.
Speaker 1 (34:39):
So interesting, I mean, any idea of what's likely to
sort of happen this year. I mean, some of these
trends that are obviously continue and push through twenty twenty six,
there might be a little bit more money coming into
the economy. But people once they've become kind of conscious
of how to invest in the space, or how to
buy something they want and use it as an investment
(35:01):
or at the real least keep its value. I mean,
once you get that to it, you're never going to
lose it exactly.
Speaker 2 (35:07):
I think what's interesting is that although you know, we've
we've kind of been working in this exponential in South
Africa where we've had the prices increasing very fast in
the luxury industry because it's been high demand and high
growth over the last five years. And at the same time,
over the last five years, we've had our currency deteriorating
really fast, so it's kind of had this exponential effect
(35:29):
on the pricing and then also the prices in the
pre owned market. And what we've seen actually this year
is because the new market's a bit softer, the price
increases haven't been that high. And additionally, the rand is strengthening,
so that's also limiting the price increases in South Africa.
So I think it's really quite stable at the stage.
Obviously we're going to see how the gold prices and
(35:51):
that come into effect with jewelry and some watches, but
it's quite a stable market. And I think that now's
really a moment to consider, you know, cost compare, because
we don't have all of these ideas of moving and
really looking at your wardrobe, what's worth selling, what's worth keeping,
and starting to understand the market, because it's really not
that wild right now as it was let's say a
(36:13):
year or two ago, where it was quite difficult to
follow unless you're doing it full time.
Speaker 1 (36:17):
Michael Zahire, thanks so much, co founder of Luxity. Really
appreciate it. Stephen, taking your calls on one one eight
three seven two. Time for the Friday Biz Blitz on
The Money Show tonight. You know how it works. We
put out a question. You phone us on a double
one double A three seven o two two one four
(36:38):
four six five six seven. If you get it right,
we move on to the next question. If you get
it wrong, we move on to the next caller. Okay,
first question on the Friday BIS Blitz tonight. Which South
African is Donald Trump threatening to sue this week? Which
South African is Donald Trump threatening to sue this week? Oh?
(37:00):
Double one double are seven two two one four four six,
five six seven. The Money Show with Stephen Curtis is
brought to you by Absent Corporate and Investment Banking balancing
economic growth with ecosystems. That's how they're invested in your story.
The Money Show Friday b is lit. First question, which
South African is Donald Trump? Threatening to sue this week.
(37:23):
Let's go to Timpisa, France. I Hi, Hi, I'm well,
go for it, France.
Speaker 4 (37:29):
I'm good.
Speaker 1 (37:31):
What's the answer?
Speaker 4 (37:33):
Tvor Noah?
Speaker 1 (37:35):
It is Trevor Noah. Do you know why?
Speaker 4 (37:38):
Yay?
Speaker 1 (37:38):
Because we spoke about him at the Grammys. That's right,
all right, France. Next question, here we go. What's the
name of the bank that operates across Africa that South
Africa finally joined this week? What's it called? Uh? My word,
can you repeat that again? Let's me think rans very quickly.
(38:00):
What's the name of the bank that operates across Africa
that we finally joined this week? What's it called? I'm sorry, France.
Let's go to Ketto Metza in four ways, Kitto Metza.
Do you know.
Speaker 3 (38:17):
I'm just going to tick a world year.
Speaker 5 (38:19):
I don't know. Sard Bank.
Speaker 1 (38:21):
Sorry, Let's go to cat in Hyde Park. Hi, Cat, Hi?
Speaker 2 (38:28):
Is it the African Export Bank?
Speaker 1 (38:31):
You're like so nearly there, Cat, I'm going to give
you another guess.
Speaker 2 (38:36):
Say it again, export Import.
Speaker 1 (38:40):
I'm looking at the judges. Yeah, Cat, We're going to
give it to you. It's the It's the African Export
Import back. Okay, next question. According to which when you
look at let me start again at Starbucks? How many
combinations of drink can you get at a Starbucks? Is
(39:03):
it twenty? Just over eighty thousand or one million? How
many combinations of drink can you get? It as Starbucks twenty? Sorry, cats,
it's not twenty. How many combinations of drink can you
get at a Starbucks? Twenty? Just over eighty thousand or
(39:24):
one million? Nastier in Joe Burg High Hi, I'm well
all right, what do you think the answer is?
Speaker 5 (39:33):
Can you see your piece of second number?
Speaker 1 (39:36):
How many combinations of drink can you get at Starbucks twenty?
Just over eighty thousand or one million?
Speaker 5 (39:43):
Is it just over eighty thousand?
Speaker 1 (39:46):
Nasia? It is Nasia. It is just over eighty thousand. Congratulations,
you're a winner on a Friday business's last year is
(40:06):
the winner? And at seven o'clock
And now The Money Show with Stephen credits on seven
oh two. Let's walk at all. The Money Show with
Stephen Crutis is brought to you by abs of corporate
and investment banking, balancing economic growth with ecosystems. That's how
they're invested in your story. Good evening, Welcome to the
Friday edition of The Money Show. Eight minutes after six.
I'm Stephen Curtis. Still quite a lot going on one
(00:24):
or two updates. Does look like markets are feeling a
little bit more positive than they were yesterday, but it
has been such a sort of up and down week
it's really hard to say. I think people still looking
for a little bit of direction. Obviously, the big story
today the big Chinese trade deal that we've signed. We
get duty free access pretty much, it seems to their
whole market. The question for me, of course, is what
(00:46):
about the reverse and what happens if you do have
complete nuttered duty free access between the two and you
have a big economy and a small economy. Who wins
and who loses? I do have a concern. I won't lie,
but as Ion Plunger knows a lot more about these
things than I do, and I'm hoping he'll put my
mind at rest. He's the chief economist and head of
research at R and B. We'll hear from him in
(01:07):
just a moment. I noticed this week it was sort
of pointed out to me, and I'm very grateful to
the person who pointed it out that some of our
banks are buying shares in each other. It was a
couple of transactions this week and thought might just investigate
that little bit of further Cookie Quoiman as the banking
unlest danker capital. It sort of goes to how all
of our banks are kind of into LinkedIn. On one level,
(01:29):
that's a very good thing. It means they sort of
look after each other and that does bring more stability.
I know, if our conspiracy theorist or you know, a
member of a radical political party or something, our child conspiracy,
and maybe we should look into that. But I kind
of just feel that actually for the system, the good
of the system, stability is all when it comes to banking,
and that's very important. I don't know if you have
(01:52):
been able to spend much money on luxury over the
last little while, and I mean, you know, top of
the range handbags, things like that. A new luxury report
from Laxity suggesting wallets are just out completely. I've never
really spent money on a Wallas. I also don't know
what I'll do with the wallet now. I mean, I
have one, but it kind of doesn't really live on
me because everything's now on your phone. The only thing
(02:14):
you have to carry on you is still your driver's
license card. I mean, come on, surely time to have
that on your phone. But otherwise I don't know really
what I'd use a wallet for. I do carry cash,
and now I do keep it in a safe place,
but I don't have it on me most of the time.
We'll talk a little bit about that change. And then
also it seems that there's some differences between what people
(02:35):
in Cape Town are buying and some people in joe
Burg are buying. Don't forget the Friday Biz Blitz as
well before seven o'clock. Good to hear from you seven
two seven oh two one seven oh two Voice notes
on Double one, Double A three oh seven two and
two one four four, six, five six seven The Lanly
Show with Stephen Kruts Live on ninety two point seven
(02:56):
and one six f M, streaming on the Prime Media
Plus Now and DStv channel eight five six. You would
have heard in the EWN News bulletin with pulling the
report from Cape Town about the SABC meeting in Parliament today.
This is a meeting of a Portfolio Committee on Communications.
They were meeting to speak to the Communications Minister, Soli
(03:16):
Malatti about the new funding model that's being proposed for
the SABC. Now I know nothing about the funding model
because the meeting, it seems, was closed to the public
and I have so many questions about this. Firstly, Parliament
has to be in the open. That's not me saying
that that's the law. By the way, Parliament has to
be in the open. You can't just because you don't
(03:38):
like this, or you worried about that, or commercial this.
It has to be in the open. I am not
convinced that the decision to keep a meeting like that
closed would actually survive a court case. I wonder if
maybe you have to have it open. Secondly, you're making
the mistake of thinking it's your SABC. It's not. It
is our SABC. It is the public, not the state,
(04:00):
the public broadcaster, and that means that everybody, including us,
we need to know what is going on around the
SABC and what government intends to do about it and
how they're going to fix it. Now if things are
sensitive and you want to keep it a secret in
South Africa, good luck to you.
Speaker 2 (04:19):
But that's on the.
Speaker 1 (04:24):
Money shows six to eight pm. Well, a big announcement
last night by the DTIC Minister Parkstow. He signed that
framework agreement with China that will get our companies duty
free access to Chinese markets by the end of March.
As I'm Clung as the chief economists head of research
at R and B as I good evening, so good
to have you again. China is a big market. I
(04:46):
mean this is a big deal for some of our companies.
Speaker 3 (04:50):
Indeed, China is a big market, you know, a big
opportunity to send a lot of our products into the
Chinese markets. But you know it also comes with some risks,
you know, the idea that it is big. A lot
of the essuyes are states supported, which means they have scalability,
(05:12):
they're a lot more efficient. It means they can send
products to the South Afgan market a lot more easier
as well. So we are opening up to new trade.
Other news, but we are going to be recipients of
other products that come into our own economy from China
which domestic companies might not be able to compete with.
(05:35):
The Automotive sector is an example. We have seen a
lot of inflows of Chinese you know, manufactured cars that
are coming to the South African market that are much cheaper,
which have displaced in terms of market share the traditional
OEMs that have been operating the South African market for
(05:55):
for for a while. So there are opportunities and risks
depending on how the trade deals are structured.
Speaker 1 (06:02):
So this is the thing. We don't know the details,
we haven't seen it yet, but presumably, and this is
a big if because I don't think it's going to
be like this, But if it's completely open access both ways,
I mean, we'll sell a lot more lemons in China
as an example, We'll sell a lot more farming, farming, producer,
mining products, but we will probably lose our car industry.
(06:25):
I mean, would it be as bad as that if
that's what it is.
Speaker 3 (06:29):
Yeah, Look, I think that's the risk that you're highlighting
is you know, you're highlighting it correctly, given that we
sell to a largely expand commodity cheese that is mining
commodities is agricultural commodities. From a manufacturing perspective, we're very
little to offer China that they can produce for themselves,
and they have a lot more to offer what we
(06:49):
can produce here. But given in that case, the automotive
companies try in the domestic economy are not South Africa.
We are simple, yes, we you know, manfacture some but
a large extent we are a collings to it for
an I mean for an export market. So we just
have to think through what are the implications in the
(07:11):
job market, What are the implications for the you know,
small manufacturing best that have built so far.
Speaker 4 (07:18):
But there is a way where you know.
Speaker 3 (07:20):
If police Americans can think about domesticating that manufacturing capability
in the South African economy to preserve jobs, that's one,
but more importantly to bring the technical know how into
the South African manufacturing sector, that will be a better deal.
Speaker 1 (07:37):
What safeguards do you think would be important? As I say,
we haven't read the agreement yet, it hasn't been made public,
but I presume something for the car industry. Maybe still
considering that, you know, we understand the id C is
in a in negotiations with Arsenal Misselle. We were reminded
of that yesterday. What would there be other areas that
(07:58):
maybe we would need to be able to say to
the Chinese, look, this is special to us. We need
to protect it.
Speaker 3 (08:04):
So catering those agreements, who have to take into account
and the social dynamics locally, the job environment locally, and
also you know, the manufacturing capability locally because if that
is displaced, we will industrialize a lot more than what
we have currently. And of course to your point, there's
still there's still sector is it is an important sector
(08:27):
that can benefit you know, other sectors beyond just itself
and the manufacturing sector. So we need to preserve that
capability locally. But that requires energy, you know a lot
of energy that is cheaper, which means it is to
be combined with an energy policy that is conclureent to
a manufacturing sector policy that you know that can build
(08:50):
or rebuild our manufacturing capability for industrialization. So we have
to consider all of that. I think it's still too
aaily now how to try and have a view on
how this trade agreement is going to look like. They
are still in negotiations and we hope in those negotiations
that will take into account the needs of the South
(09:13):
African economy as they open up the Chinese economy for
South African products.
Speaker 1 (09:18):
Is it always the case that if one big economy
has an open access trade deal with a smaller economy,
so the term of exactly the same access to each
other's economies. I mean, my gut sort of wants to
say the big one always wins. Is that the case?
Speaker 3 (09:35):
It's not always the case. There are instances where you
have a transfer of technology to the smaller economy such
that it drives much more than it used to be
before the trade deal. It all depends on what the
policy makers negotiate and what is you know that which
they're going to agree to in the sectors which are
(09:56):
quite important for the South African economy. So it's not
a foregoing conglusion that will be on a net negative
depending on how we structure it. Where do we want
to gain If we could gain from a technology and
capability transfer perspective into the domestic economy, that would benefit
South Africa long term, But it needs careful considerations or
(10:19):
hopefully the policy makers are going to take into account
the needs of the South African economy to re industrial lies.
They're the best that we can use to export into
the larger continent under the Africa Frequenttender Agreement.
Speaker 1 (10:34):
As I am planker, thank you so much, so much
to think about. Chief Economists and head of Research at
R and B. Nineteen minutes after six the Money Show
explain that the last couple of weeks, they've been a
few interesting transactions involving our banks and their relationships to
each other. I'm supposed to simplify at Standard Bank now
owns six percent of investing, Standard Bank owns five percent
(10:56):
of netbank. African Bank is twenty five percent earned by
con him of the big five banks. Why on earth
there our banks buying into each other? Cookie Cooman is
the banking and listed Thank you capital Cookie, good evening,
Thanks so much for the time. I mean, why do
our banks want to own bits of each other?
Speaker 4 (11:13):
By Steve and you are a good introduction, but we
was the first separate two issues. Number one, the five
and six percenters that you refer to Sound Bank owning
of in their steck and et cetera. Those are shareholdings
via their pension funds or unit trusts. Maybe that they
(11:36):
manage so remember the bank doesn't own those shares and
it actually has no say over any decisions regarding those shares.
The members of the pension funds own that and there
are managers and trustees who make sure that there's a
ducial duty towards those pension fund members are is correctly
(12:00):
separated from the bank's wishes. So the Standard Bank would
have no influence whatsoever on any vote or any decision
that it's holdings in Investec via Expansion Fund is made.
The second one is different, and that is in this
case is the holding in African Bank. And whether we
(12:23):
can talk a third one just now as well, like
net Bank who owned twenty percent in Eco Bank, and
now I bought to sixty five percent stake in a
bank in Uganda, But the African Bank one was a
bank that actually got into trouble, was collapsing, and I
think was a ten years before that. Ruckly, we had
the same ensemble where you know, the bank had a
(12:48):
run on deposits, which is always your biggest fear in banking.
And when your deposits start feeing, the central bank has
to step in because and that's the whole system of banking.
It's actually banking works on the premise that deposit ninety
depositors need the money at the bank, so the depositors
(13:08):
can often have shortened deposits with the bank, but the
lending the duration of the lending is much longer than
that of the deposits. So when when more than it's
five percent of depositors with draw their money, a bank
cannot actually fund them and the central bank has to
step in and in the end the taxpayer has to
make good. So okay, African Bank was a good example
(13:29):
where the Minister Finance gets involved, the central bank gets
involved and they work out a transaction to save the bank,
to stabilize the whole system. Because the older reading listeners
might still remember what happened when when Soombo started going thereafter,
Bank of Boe wasn't Bank of the East was at risk.
(13:55):
Net Bank was at risk. Because it spreads up the line,
people start getting worried and then someone has to step
into say I've got big pockets, don't worry, your deposits
are safe. Okay. African Bank is held by the various
banks because at that stage the arrangement was made that
it's better that those shares are placed so that all
have an interest in making sure African banks survived which
(14:17):
are dead. And so now that it's listed, I think
there's a lock up period, but gradually they will sell
those banks back onto the other shares back into the market.
Speaker 1 (14:26):
Again, Okay, does that raise I mean, I mean the
shareholdings are relatively small. I'm so curious as to why
the pension fund of Standard Bank would buy into what
is sensibly a competitor.
Speaker 4 (14:39):
Okay, it's remember, as I said, it's a separate entity,
separate from the bank. So they're all invest in what
they're but also what we tend to forget, how the
JS shrunk. You will sort of remember was it fifteen
years ago where the pricess was called public in the newspapers.
(15:01):
You add up to three pages of shareholdings and now
it's basically I think it's it's less than one hundred
of larger shares. So the share, the number of shares
of shrunk, and the number of larger liquid shares of
shrunk as well. And so almost by default, any large
(15:21):
pension fund and any large unit trust or by default
have to own almost everything in the economy, and by
default it will be a fairly sizable. So Standard Bank's
pension fund, which I think just logically it would because
of the biggest bank, bigger number of shells, would be
one of the largest extensions on bigger than that of netbank.
(15:44):
It would have a larger share of of ownership in
other banks. And obviously whoever that management of that son
has been outsourced to might decide it life's netbank because
or investigate those case investics. Price to ind turn on
capital is very cheap, so obviously they've been taking a
(16:05):
bigger investment in let's say, Investeck rather than whatever capitech,
which is very expensive. But those will be the decisions
of the the time manager of the pension fund.
Speaker 1 (16:20):
Does it matter that our banking industry can look all
quite interconnected? I mean, on one level, it makes me think, well,
they all, for various reasons, kind of are slightly interconnected,
but they're still healthy competition. I can't see how you
couldn't say that. On another level, if I were a
conspiracy theorist and cooky I help my moments later on
(16:40):
a Friday, look at all the bankers and I'm like,
you're all in it together.
Speaker 4 (16:46):
Oh look, I think it was a ticket bar article
in the newspaper which said that Standard Bank has a
stake invest Tech, and people mediately sort of thinking, oh,
and look on the two sides of the story. On
the one hand, for the consolidation of our bank sector,
(17:07):
and you saw that in Australia and in Canada and
a few other countries is actually healthy because it leads
to more efficiency. But then it leads to less competition.
So there are many voices, and I think correctly say
the same reserve bank will actually increase the number of competitors.
But more competitors also mean more risk of them defaulting
(17:29):
like Assemble or African Bank dead. So your control must
be and your bank supervision must be very good. But
generally our bank sector is very competitive. Trust me. I
speak to them regularly, and you know, but it is
true that the banks will always be on the lookout
for a weak competitor, and you know, like the smaller
(17:51):
banks netbank and in the respect, I'm sure regularly the
boards or the exec teams of the other banks say
should we think of buying investor should you think of
buying netbanks because they're smaller? Or someone? Now did they
die up with the Time bank? But I think because
that is a low growth economy at the moment. We
(18:12):
hope that changes, but that means that the only benefit
of taking out a competitor is to get efficiencies, and
that means you've got to lay up staff, you've got
a close branches. Competition. Commission won't like that. It's hard work,
and that's why you find most of the Salatican banks,
in fact, all of them have been focusing more on
(18:34):
doing acquisitions in Africa. And I think that's why the
African countries are growing faster than ours at the moment,
and they can do a technology and expertise transfer. It's
not as competitive there and those are growing economy, and
I think so you'll see SA banks continuing to rather
(18:55):
grow their footprint in Africa rather than increasing the level
of competition here in South Africa.
Speaker 1 (19:04):
Goky GOI man, thank you so much, really to appreciate it.
Banking analyst at den Care Capital. Right. I think that's
been explained certainly to me. Twenty seven minutes after six
the Money Show, Grant Natives Portfolio Manager be Guerla Global
Fund Managers Grant Good Evening Harmony. Yes, of course we
expect their earnings to be well, you know, over one
hundred percent more because of the gold price. But quite
(19:26):
a nice production update.
Speaker 5 (19:29):
Yeah, nice update, and they had some operational disruption in
the second quarter. So the fact that they on tack
to meet their full your guidance, I think is very encouraging.
So you know, we don't want to see them not
taking advantage of this opportunity. I mean this gold price,
as we know, near record levels. It's a fantastic opportunity
for our miners, for our fiscus. So good to see
that production stability. And I do know that the costs
(19:52):
for answer all in sustaining costs are creeping up. It's
a problem across the industry, and so it does it
does tend to I think it's formal a higher base
for future gold price. And I don't think we're ever
going to see some of those levels we saw again
back in the two thousand and below level, but we
will see.
Speaker 1 (20:10):
Yeah, interesting news overnight the sort of deal, the proposed
deal between glen Core and Rio Tinto it's been called off.
Was that just too much ego? Does it not make
economic sense?
Speaker 5 (20:23):
Look, I think the economic rational makes sense. There's a
good fit between the portfolios. Rio needs what Glencore has
and Glencore could do with the scale and whatnot that
Rio brings. But you know, you have got Glencre which
is a sort of a founder and well it's not
a founder run business, but it's very much a nontroprimurial business.
Rio is very much a corporate Glencore and Rio's both
(20:43):
have very distinct cultures. Remember you know, glen Call run
by South Africans, by VIZ graduates cas from VITZ and
there's a lot of them working in the company. Is
a very clear culture, and I think it's important to
them to sustain that. But I will say that glen
Core it's not significantly worse off without it. They have
a very good portfolio of metals, and I think they're
(21:06):
well positioned for some of the future demand around copper,
cobalt and some of the new new metals so to speak.
Speaker 4 (21:14):
So I think I'll be fine.
Speaker 5 (21:15):
I'm wondering to myself, does HP turn around and have
a look at glen Corn now, because they've got the
copper gem that everyone's looking for. Didn't work with Rios
and they missed Anglers, so maybe they're on the table
for Billiton. It's be interesting to watch that space.
Speaker 1 (21:29):
I mean a whole shakeout in the metal sector that
we've seen over the week. I mean, quite traumatic in
a way, very volatile. I mean, I don't know, I
don't really see an enter it for the meantime, and
I mean it seems that the market is still quite
vulnerable to rarely this kind of thing for a while.
Speaker 5 (21:46):
Yeah, I think we should expect it, given the kind
of moves we've seen and the speed of the moves.
They're inevitably attracts a lot of speculative positioning, a lot
of fast money. And then when you have that kind
of environment, the moves of top both up and down,
and you get margin calls, you know they've been pushing
up margin to sort of manage the speculation. Then you
(22:08):
see further forth selling. So I think the volatility is
here to stay, as you say, and it's probably part
of a healthy, hopefully consolidation phase from our perspectives. But
I don't think it's changed the fundamentals or the underlying
drivers are, especially with regard to gold.
Speaker 1 (22:25):
Thank you very much. Indeed, Grant Nada as portfolio manager
being Wuella Global fund managers really appreciate it. Just on
sixth thirty, The Money Show with Stephen on seven O
two seven O two. Well Hews today that Discovery, the
financial group, has decided to spend four billion round buying
its own headquarters in santon It was fifty five percent
(22:47):
owned by Growth point forty five percent owned by another group,
and essentially Discovery is saying, look, we'll own our own headquarters.
It does make sense. Among many other things it's been
pointed out several times today is that this looks like
quite a big vote of confidence in Santain. If you
have a landlord, you would be able to, you know,
give notice even a couple of years notice and move out,
(23:08):
and Discovery are clearly saying, well, we are staying here,
which is interesting because Santurn still has some of the
most expensive commercial property, or really does have the most
expensive commercial property in the country. And from time to
time someone will make a comment about satin All this,
all that, but just the last couple of days, if
you look at the sheer amount of traffic going into
(23:31):
Santin in the morning, and I sometimes drive against it
because you know, from three o'clock people start to leave
sentin as they go home or fetch children or whatever
it is. At the end of the day, certainly that
traffic is going nowhere. I mean that in both ways.
One it's going to keep getting stuck in Santain, and
two most of the time it's not really moving. The
(23:53):
point is that traffic doesn't lie. Traffic tells you how
strong sentence still seems to be at the moment. If
I were owning land and centered, if someone offered me
a piece and I had four billion round, that might
actually be a very very wise investment for the future.
Your thoughts seven two seven two one seven o two
(24:14):
show the Friday File. The Friday File seventeen minutes now
to seven the time well Amid claims that more and
more of us are still stuck in debt. To report
out about the business of luxury. That suggests some of
the bigger, more conspicuous, more obvious luxury brands maybe aren't
doing as well as they did what it's also seemed
(24:35):
to really not be doing very well at all. The
report comes from Luxity. It's the store, the group that
resells luxury items. Michael Zaharrev is the co founder of Luxity.
Michael good evening, good to chat again. I mean, what
are you finding is changing in the market? I mean
clearly handbags are still in but what people are interested
(24:55):
in handbags does seem to be changing.
Speaker 2 (24:59):
Yes, thank you for having me again on the show,
and exactly what you're saying. The market is definitely evolving.
In fact, this is one of the years where we've
seen the greatest evolution. In general, the luxury market has
been booming for the last five years, and the Clear
Shopping Index report this year actually showed that the new
(25:20):
luxury market has contracted just one percent, so very flat there.
Luxity representative of the pre owned market at the same time,
has grown twenty seven percent over the same period, so
we can see that consumers are definitely buying into this
pre owned trend number one, and more importantly, the taste
of consumers are shifting. Traditionally, we saw that consumers were
(25:42):
really gravitating to more the affordable items shoes, wallets, the
goods under ten thousand rand in terms of affordability for
the luxury industry because we're kind of an entry point.
But this year, surprisingly, what we're seeing is consumers are
gravitating more and more towards jewelery and handbags, which are
(26:03):
much more expensive. And the reason for this that we
can the juice is due to their resale value being
much higher. So we're seeing the rise of what we
call the trendy, the streets consumer. You know, someone who's
doing research and really understanding what's going to resell later
and have greater value.
Speaker 1 (26:22):
So I mean there's also maybe, you know, for something
under ten thousand rand, you walk past the shop window,
you walk past it again, it catches your eye again.
It's not so much a sort of instinct purchase or
an impulse purchase, but maybe in the course of a
week you've taken the decision to buy it for something
bigger than that luxury handbag. You're looking at resale values,
(26:43):
you're doing some serious research beforehand, You're taking a lot
more time over the decision exactly.
Speaker 2 (26:49):
And that's what's happening. Customers are not only taking time
to see, you know, can I afford it, but they're
also starting to understand what is it going to resell for.
So traditionally, if we look at the most popular brand
in South Africa, Groucci and Louis Verton were really the heavyweights.
They were making up one third of searchers on our website,
and this is across hundreds of thousands of searchers a month,
(27:12):
so they were making up one third of all of
the search traffic. Now this year is the first year
they've dropped, and they've dropped substantially down to just twenty percent.
And smaller brands, particularly brands that hold their resale value
more have started to materialize. So brands like Rolex, brands
like a Mares, brands like Chanel, those really hold their
(27:33):
resale value and that's what the consumers starting to buy into.
So I think it speaks to this narrative that the
consumer is not only looking for what's popular, but they're
also looking more from an investment mindset, where I want
to make sure I'm making a purchase that can give
me some kind of a return or at least I
would lose so much if I'm looking to sell it
(27:54):
back into the future.
Speaker 1 (27:56):
How important is it for people to know what it
is that you have? And I mean this gets quite complicated.
There are people who spend hours looking at what websites
and you know what did Johann what's his name? You
know who? I mean, where today and that kind of thing.
I mean, I find that a bit bizarre in a way,
(28:16):
but I can understand the interest does what you were
wearing still sort of attract people to particular brands.
Speaker 2 (28:24):
I think so. So South Africa has a very aspirational
culture and it's quite different to the Western world. So
I think in the West, you know, they gravitate very
much to celebrities and trends, whereas in South Africa we
found that the consumer generally gravitates multi status. So it
wasn't so much you know, what is X, Y and
Z and celebrity wearing, but it was more about when
(28:45):
I'm wearing this brand, I want to make sure that
it's very obvious. I want to make sure that everyone
can recognize that it's a Louis Vuitton or a Gucci.
So generally speaking, the louder brand performed far better in
South Africa than what we're seeing in the western, more
established markets. However, this trend is also starting to change
more and more, where we're seeing some of the quieter
(29:08):
brands growing at a faster rate than some of them
louder brands. So I think that speaks to a mature
in consumer But overall, in South Africa, definitely, you know,
the louder, flashier brands hold the largest sway of the
market or more popular are more popular amount the consumers.
Speaker 1 (29:26):
A quieter brand, I put that in inverted comments carries
its own power because it's kind of suggesting that I'm
more discerning, isn't it. I mean it doesn't it say
I don't need to show off, but you're showing off
that you don't need to show off.
Speaker 2 (29:42):
Yes, I think so it holds. It holds a value
to a certain segment of the market, which is you know,
a lot more of you know, they focus on the heritage.
It's more generational wealth. You know, it's not just this,
you know what we call old money versus new money.
And the interest thing actually is last year we did
a report on you know, Cape Town verus Johannesburg, and
(30:06):
what we actually found is Johannesburg was gravitating a lot
more to louder brands than Cape Town and in general,
although people in Johannesburg and Halteng region at least were
purchasing a lot more frequently in terms of items, they
were purchasing lower value items, whereas the Capetonians or Western
Cape in general was purchasing more expensive items and more
(30:28):
from the quieter brands. So I think it speaks to
you know the difference of the cities and the makeup
of the demographics, and you know the economies, et cetera.
Speaker 1 (30:39):
Is there a kind of older money thing in Cape Town? Maybe?
Speaker 2 (30:43):
Well, I mean the data seems to suggest that, at
least from a preference point of view, Like I mentioned,
the Western societies, generally, the the move is more to
the stuff wealth and the younger generations or your first
purchase with the more of these more flashier brand. South
Africa certainly the dominating the searchers are for more flashy items.
(31:05):
When we look even within the brand, the items that
are within each brand are the louder ones. So it
suggests that in South Africa the market is more tuned
to that new money kind of culture. But in the
Western Cape at least, that that shift isn't as prominent
as it is in how.
Speaker 1 (31:22):
Tech consumers change as they get older, right, I mean,
it must be interesting to sort of I don't know
if you're able to keep this kind of data, you know,
the age of a customer. I mean, you're not going
to ask them how all they are the checkout, well
I hope not, and sort of see what they're buying
as opposed to what a younger person is buying. So
someone coming into your stores for the first time, first
luxury purchase, probably not going to be something very expensive,
(31:45):
just going to get a taste for it, but you know,
something they want to do with their brand and then
sort of you know, go from there and kind of
mature as a customer into luxury if they stay in
that income bracket. I mean, you must see customers coming
back and changing as they do.
Speaker 2 (32:00):
That certainly, but I think there are some you know,
intricacies there, especially when we're talking about South Africa. So
in South Africa, you really have a much smaller age
band of consumer because the goods are relatively much more
expensive versus our earning capacity. So what we see in
(32:21):
South Africa is, you know, the consumer really starts around
thirty five generally and then goes up to you know,
around sixty for the majority of the consumers. And so
that's a much tighter age like age band than we're
seeing when we look at the Western data, which you
know starts even at eighteen years old for the pre
owned segment. But within that age band, definitely there are
(32:42):
some changes, but the majority of the consumers are currently
coming in in that like thirty five to three five segment,
so that's the dominant part of the market. What is interesting, however,
is how we've seen the market evolve in terms of
pre owned. Five years ago, there was this very very
specific split between those who were buying and those who
(33:04):
were selling. However, nowadays it's very mixed. So we have people,
we have consumers that are essentially you know, unlimited wealth,
ultra high network with individuals that could purchase anything new,
but they're still choosing to buy pre owned more and
more because of sustainability and also because of access to
limited edition items or items not available in South Africa.
(33:28):
So there's definitely a shift in terms of the mentality
overall more towards this idea of commercializing pre owned and
in jewelry.
Speaker 1 (33:37):
Obviously the gold prices you know, sold through the roof,
has that had any impact on what people are actually buying?
Do people maybe want to be seen in a bit
of gold? Was that not really done well?
Speaker 2 (33:48):
I don't think it's materialized yet in the pre owned market.
I think because we're selling brands, the brands essentially are
updating their prices, you know, twice a year, so there's
gold prices have certainly been spiking, but because we have
kind of a lag effect in terms of the price adjustment,
it hasn't come through to the pre owned market yet,
(34:10):
but certainly in the next year or half a year,
that's really going to start making a big impact on
the new market and immediately on the pre owned market.
So I think there's a great value in that. And
actually jewelry interest in jury, or at least jewelry sales
were up forty seven percent in the last year, which
was the record for any category across all the categories
(34:31):
we serve. So certainly consumers are moving more and more
into jewelry, and that's likely because they're seeing it more
as an asset purchase than just a fashion trend.
Speaker 1 (34:39):
So interesting, I mean, any idea of what's likely to
sort of happen this year. I mean, some of these
trends that are obviously continue and push through twenty twenty six,
there might be a little bit more money coming into
the economy. But people once they've become kind of conscious
of how to invest in the space, or how to
buy something they want and use it as an investment
(35:01):
or at the real least keep its value. I mean,
once you get that to it, you're never going to
lose it exactly.
Speaker 2 (35:07):
I think what's interesting is that although you know, we've
we've kind of been working in this exponential in South
Africa where we've had the prices increasing very fast in
the luxury industry because it's been high demand and high
growth over the last five years. And at the same time,
over the last five years, we've had our currency deteriorating
really fast, so it's kind of had this exponential effect
(35:29):
on the pricing and then also the prices in the
pre owned market. And what we've seen actually this year
is because the new market's a bit softer, the price
increases haven't been that high. And additionally, the rand is strengthening,
so that's also limiting the price increases in South Africa.
So I think it's really quite stable at the stage.
Obviously we're going to see how the gold prices and
(35:51):
that come into effect with jewelry and some watches, but
it's quite a stable market. And I think that now's
really a moment to consider, you know, cost compare, because
we don't have all of these ideas of moving and
really looking at your wardrobe, what's worth selling, what's worth keeping,
and starting to understand the market, because it's really not
that wild right now as it was let's say a
(36:13):
year or two ago, where it was quite difficult to
follow unless you're doing it full time.
Speaker 1 (36:17):
Michael Zahire, thanks so much, co founder of Luxity. Really
appreciate it. Stephen, taking your calls on one one eight
three seven two. Time for the Friday Biz Blitz on
The Money Show tonight. You know how it works. We
put out a question. You phone us on a double
one double A three seven o two two one four
(36:38):
four six five six seven. If you get it right,
we move on to the next question. If you get
it wrong, we move on to the next caller. Okay,
first question on the Friday BIS Blitz tonight. Which South
African is Donald Trump threatening to sue this week? Which
South African is Donald Trump threatening to sue this week? Oh?
(37:00):
Double one double are seven two two one four four six,
five six seven. The Money Show with Stephen Curtis is
brought to you by Absent Corporate and Investment Banking balancing
economic growth with ecosystems. That's how they're invested in your story.
The Money Show Friday b is lit. First question, which
South African is Donald Trump? Threatening to sue this week.
(37:23):
Let's go to Timpisa, France. I Hi, Hi, I'm well,
go for it, France.
Speaker 4 (37:29):
I'm good.
Speaker 1 (37:31):
What's the answer?
Speaker 4 (37:33):
Tvor Noah?
Speaker 1 (37:35):
It is Trevor Noah. Do you know why?
Speaker 4 (37:38):
Yay?
Speaker 1 (37:38):
Because we spoke about him at the Grammys. That's right,
all right, France. Next question, here we go. What's the
name of the bank that operates across Africa that South
Africa finally joined this week? What's it called? Uh? My word,
can you repeat that again? Let's me think rans very quickly.
(38:00):
What's the name of the bank that operates across Africa
that we finally joined this week? What's it called? I'm sorry, France.
Let's go to Ketto Metza in four ways, Kitto Metza.
Do you know.
Speaker 3 (38:17):
I'm just going to tick a world year.
Speaker 5 (38:19):
I don't know. Sard Bank.
Speaker 1 (38:21):
Sorry, Let's go to cat in Hyde Park. Hi, Cat, Hi?
Speaker 2 (38:28):
Is it the African Export Bank?
Speaker 1 (38:31):
You're like so nearly there, Cat, I'm going to give
you another guess.
Speaker 2 (38:36):
Say it again, export Import.
Speaker 1 (38:40):
I'm looking at the judges. Yeah, Cat, We're going to
give it to you. It's the It's the African Export
Import back. Okay, next question. According to which when you
look at let me start again at Starbucks? How many
combinations of drink can you get at a Starbucks? Is
(39:03):
it twenty? Just over eighty thousand or one million? How
many combinations of drink can you get? It as Starbucks twenty? Sorry, cats,
it's not twenty. How many combinations of drink can you
get at a Starbucks? Twenty? Just over eighty thousand or
(39:24):
one million? Nastier in Joe Burg High Hi, I'm well
all right, what do you think the answer is?
Speaker 5 (39:33):
Can you see your piece of second number?
Speaker 1 (39:36):
How many combinations of drink can you get at Starbucks twenty?
Just over eighty thousand or one million?
Speaker 5 (39:43):
Is it just over eighty thousand?
Speaker 1 (39:46):
Nasia? It is Nasia. It is just over eighty thousand. Congratulations,
you're a winner on a Friday business's last year is
(40:06):
the winner? And at seven o'clock
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