Does Barloworld want out of its R5.35 billion acquisition of Tongaat Hulett's starch business? That's how it appears after the industrial group issued a material adverse change notice to the sugar producer due to the impact it believes Covid-19 will have on key profit measures at the starch operation this year. While Tongaat has defended the business, saying it's way too early to tell, its shares declined at the prospect of the much-needed sale falling through.

One area where Tongaat Starch is losing business is on the manufacturing of alcohol due to the current prohibition on sales. Another business also impacted is Pick n Pay, which says lost revenue from alcohol and cigarette sales will affect its results in the year ahead. Following a tough year, it has postponed paying a final dividend due to the uncertainty that lies ahead.

There was good news from Sibanye-Stillwater, however, following a strong first-quarter for the gold and platinum group. Afrimat also expects to turn in a solid performance, while Calgro M3 says its business is on the mend.

With the economy in trouble this year, Allan Greenblo, editorial director of Today's Trustee, poses the question: could IMF assistance for SA as a result of Covid-19 be a blessing in disguise?

While National Treasury engages with the global fund, the SA Reserve Bank is also working to support the economy.

The SARB is a pillar of rectitude but following central bank examples from around the world may not always be best practice and have all sorts of distorting effects. In "Why do central banks do what they do?", top trader Andrew Kinsey sends a warning message that has implications for the local economy and financial markets.

This slots into a theme that was addressed last week in a Covid-19 credit markets Insight entitled "Lower for longer on rates?". Rising debt and deficits are common to rich and poor countries, including South Africa. Will there be further downward pressure on interest rates or will rising debt have the opposite effect?

Have a good day and stay safe.

Stephen Gunnion

Managing Editor, InceConnect

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