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South Africa: rand under pressure
Battered by falling metal prices and labour unrest, the South African rand touched a four-year low on Thursday of 9.3836 to the US dollar.
And with the mining industry suffering strikes, the economy sluggish and credit rating agencies nervously eyeing the country’s finances, the currency could have further to fall. Continue reading »
S Africa consumers reluctant to take brake off spending
South Africa’s consumers are reluctant to take the brake off spending even though inflation is at a four-decade low, according to retail trade sales data released on Wednesday by government agency Statistics South Africa.
Retail sales growth softened to 2.8 per cent year-on-year in March from a revised 3.9 per cent in February. Despite the fall, consumption remains robust and was stronger than the 2.4 per cent consensus in a Bloomberg survey of 16 economists. Continue reading »
Platinum miners forecast to maintain output despite risk of labour unrest
Investors in platinum hoping for a sustained bull run may be disappointed this year. Despite the labour unrest that keeps hitting South Africa’s miners, the biggest producers, supply and demand are pretty well balanced, says Johnson Matthey, the refiner in its annual review.
Even allowing for possible disruption, South African platinum output is expected to remain flat this year and Russian stockpiles – built up in the Soviet-era – are set to diminish. So, says Johnson Matthey, if investment demand grows a bit as it did last year, the global market for platinum may be in a “slight deficit” in 2013. That’s better than a glut, but given the general caution in precious metals markets, it’s unlikely to move prices much. Continue reading »
Amplats: smaller cuts, no-one pleased
South African mining firms are in a delicate position. Squeezed by falling commodity prices, production problems and labour unrest, they are trying to push on with plans to cut costs while treading carefully to keep workers onside.
On Friday, top global platinum producer Anglo American Platinum (Amplats) announced its decision to slash 6,000 jobs, a far cry from the 14,000 originally planned – but the main union AMCU rejected the announcement, and Amplats may find itself dragged back to the drawing board. Continue reading »
How to get Africa online: ‘white space’
Africa has the lowest internet penetration rate globally, but some of the world’s tech giants think they may have touched a magic formula for the rollout of broadband on the continent.
The ‘white spaces’ technology being deployed by Microsoft could bring “almost 80 per cent of Kenya’s population online over the next three years,” according to Fernando de Sousa, who heads up the company’s 4Afrika initiative.
Bearing in mind that Kenya’s population has grown to just over 40m, that’s a fairly substantial number. Continue reading »
S Africa’s empowerment programme: rethink or expand?
“What’s The Economist?” asks Trevor Manuel with a smile when questioned about the newspaper’s recent criticism of South Africa’s Black Economic Empowerment programme (BEE). The article claimed BEE was enriching a tiny black minority, but failing to engineer the broad socio-economic transformation that it intended.
Manuel, South Africa’s planning minister, is no blind follower of ANC policy – recently attracting criticism after chiding his colleagues for blaming South Africa’s woes on apartheid. But he argues that employment equity is a “constitutional imperative”, and criticises the “malignant compliance and foot-dragging” of some companies in the past. Continue reading »
African Bank: short seller shines light
When a short seller launches a public attack on a company, the resulting storm can lead to a big dip in share price as investors digest the charge sheet – see Muddy Waters on Olam.
But African Bank, South Africa’s biggest household lender, saw its shares climb on Thursday despite a highly critical presentation by David Stemerman of Conatus at a conference in New York on Wednesday. A less-than-convincing case by the short seller? Or a question of the bad news already being out there? Continue reading »
South African Airways: still got friends
It may be having a rough time at home, but South African Airways still has friends overseas – and the latest is Etihad Airways. The airlines announced a strategic partnership on Monday, including a route-sharing partnership on flights to Abu Dhabi and beyond.
SAA and Etihad will also look at joint procurement and maintenance opportunities, according to the statement. In return, Etihad gets access to 10 cities in South Africa and other parts of Africa. Continue reading »
SA: unit trusts pick up pace
Strong regulation and transparency in the local financial market is ramping up investor confidence in South Africa’s Collective Investment Schemes or unit trusts, an industry body says, after the sector attracted net inflows of R47bn ($5.2bn) in the first quarter of 2013 – the second biggest quarterly net inflows ever. Continue reading »
Harmony: loss sparks sell-off
South African mining stocks have had a tough time of it in the last 12 months what with strikes, outages and falling commodity prices. So you’d expect much of the bad news to be priced in.
However, Harmony Gold pulled off a surprise on Friday. The company announced a headline loss for the latest quarter of $23m, mainly due to the prolonged closure of a key mine. Its shares fell over 8 per cent to a low not seen since 2005. Continue reading »
S Africa trade: did China come through?
In the run up to this month’s trade data from South Africa, there were a couple of different theories doing the rounds.
One was that the deficit would get a lot worse, based on a the timing of holidays and the recent industrial unrest (hurting exports); the other was that the trade account would get a lot better, based on the weakening rand and a pick up of exports to China. The Bloomberg analysts consensus was for a slight improvement at R8.5bn ($945m) deficit.
Which was right? Continue reading »
S Africa: China might make all the (trade) difference
A weaker rand may add to the cost of imports in South Africa, but there are positive effects. The depreciation that has seen the rand fall 6.47 per cent year to date is helping exports and, if could even help ease the country’s balance of trade headache.
Trade data due on Tuesday may show that Chinese imports from the country have shot up in March, according to one analyst, which could underpin an improvement in South Africa’s trade balance. It’s not the consensus view, but it’s worth taking note. Continue reading »
S Africa: tourism from Brics on the rise
Many of South Africa’s economic indicators have lagged recently on Europe’s downturn. And China’s economic slowdown could also take its toll on sub-Saharan exports to China.
But one indicator is up for Africa’s largest economy: tourism. And specifcally from the Bric nations. Continue reading »
S Africa: vote of confidence from BP
When one of the biggest energy companies in the world says it will invest half a billion dollars, that’s nothing to sniff at. British oil giant BP announced on Wednesday it will invest R5bn ($550m) in South Africa.
It might not be the biggest deal, but it’s a thumbs up after the hard time the country has had attracting foreign investment. The funding will be ploughed into its refinery, terminal and retail network assets over five years. Continue reading »
What’s the impact of China’s slowdown on Africa?
The China-Africa debate is never far away. Lamido Sanusi, governor of Nigeria’s central bank, recently wrote in the FT of a whiff of colonialism. Much has been said about the two countries’ unequal relationship, based on China’s supposedly insatiable desire for African raw materials and for control of its mining assets.
But perhaps a bigger problem is not China’s dominance but China’s slowdown. What happens when the country doesn’t want so many of Africa’s exports? That moment may be coming sooner than you think. Continue reading »
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