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The South African Reserve Bank (SARB) kept lending rates unchanged this week at the conclusion of the Monetary Policy Committee (MPC) meeting. The decision by policy makers was not however unanimous with three out of the seven members voted for an incremental rate hike of 25 basis points (0.25%).
Some of the key takeaways from the Reserve Bank are as follows:
In a separate public address, South African president Cyril Ramaphosa, has outlined a basic stimulus and recovery plan aimed at stemming job losses and restoring investor confidence in the Country. Some of the key features of this plan include:
- Setting up a new R400bn infrastructure fund
- Reducing port and rail tariffs as well as administrative electricity charges to reduce business costs
- Remove the Minerals and Petroleum Resources Development Act and release the new mining charter
- Reprioritise existing budgets to focus on agriculture, townships, hospital equipment and school sanitation
While the trade war narrative persists, equity markets across the globe have managed to stay buoyant this week.
US president Donald Trump announced that the additional 10% in tariffs proposed on $200bn of worth of Chinese imported goods would go ahead (as of the 24th of September), despite threats from Chinese authorities that they would walk away from bilateral trade talks should these duties be imposed. The US has threatened to target a further $267bn in Chinese imports should the region retaliate. China did retaliate with new duties announced on $60bn of US goods. China did not however follow through on threats to walk away from upcoming traded talks with the US.
It would appear that markets have been pricing in a heavier increase (25%) in tariffs from the US as well as the suggested break down in trade talks. The fact that these scenarios have not yet manifested is perhaps providing some reprieve to equity and commodity markets in the short term.
|25 September||16:00||USD||CB Consumer Confidence||133.4|
|26 September||03:00||NZD||ANZ Business Confidence||-50.3|
|26 September||16:30||USD||Crude Oil Inventories||-2.1m|
|26 September||20:00||USD||FOMC Economic Projections|
|26 September||20:00||USD||FOMC Statement|
|26 September||20:00||USD||Federal Funds Rate||<2.00%|
|26 September||20:30||USD||FOMC Press Conference|
|27 September||11:30||ZAR||PPI y/y||6.10%|
|27 September||14:30||USD||Core Durable Goods Orders m/m||0.10%|
|27 September||14:30||USD||Final GDP q/q||4.20%|
|28 September||08:00||ZAR||M3 Money Supply y/y||6%|
|28 September||10:30||GBP||Current Account||-17.7B|
Source: Economic Calendar, as of 21/09/2018
Commodity prices have had a positive week with a softer dollar and slightly more optimistic market sentiment to aid near term gains.
Oil prices have continued to rise ahead of the upcoming OPEC meeting (Sunday 23 September). Brent crude is now testing the $80/barrel mark as speculation mounts that the oil cartel will be able to fill the gap in supply left by an embargoed Iran.
Platinum and palladium in particular have had an exceptional week, gaining significantly on Thursday, following reports of increased imports into Switzerland for August 2018. Switzerland is a major refining and vaulting destination for precious metals.
The rand has seen a strong recovery in the week, gaining traction into the Reserve Bank’s MPC meeting on Thursday. Initial gains in the domestic currency followed emerging market momentum catalysed by tighter monetary policy in Turkey, Russia and Argentina. While there was some outside speculation that the SARB may follow suit and raise South African lending rates on Thursday, this was not to be, although a hawkish tone was set by the Reserve Bank Governor, seemingly enough to continue the short term strength in the rand.
Pick n Pay Stores Limited: released a 1H18 trading statement guiding that the company expects headline earnings per share to increase by between 75.0% and 85.0% from the prior year’s comparative period
Remgro Limited: FY18 results showed diluted earnings per share to have increased to 1,481.10c from 1,436.80c in the previous year
Astral Foods Ltd - Headline earnings per share for the 12 months ending September 2018 is expected to be at least 85% up on the previous year.
Pan African Resources - FY18 results showed headline earnings per share from continuing operations to have decreased to 18.71 cents per share from 38.72 cents per share in the previous year
Naspers: has said that it intends to separately list its Multichoice business in 1H2019
Sibanye Gold Limited: has guided that the South African Competition Commission has recommended that the South African Competition Tribunal approves the company’s proposed acquisition of Lonmin Plc, subject to certain conditions, which are agreeable to both Sibanye-Stillwater and the Commission
Rhodes Food Group Holdings Limited: an FY18 trading statement has guided that the company expects headline earnings per share to have declined by between 30.0% and 40.0% from the previous year
Capitec Bank Holdings Interim results 1H19
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