By Peter Leon, Webber Wentzel
As the great, the good and the not so good descend on Cape Town in midsummer for next week’s annual mining indaba (conference), investors in the South African mining industry may be able to celebrate some unexpected good news.
Two weeks ago, President Jacob Zuma exercised a rare Presidential veto, declining to sign into law a bill which would have created an export licensing system for South Africa’s treasure trove of minerals. Read more
The undisputed headline grabber at the end of South Africa’s monetary policy committee meeting on Thursday was the surprise announcement that Gill Marcus would not be seeking to renew her five-year term as central bank governor when it expires on November.
There is little doubt she will be missed by the financial community and all eyes will be on the appointment of her successor, with the hope that the South African Reserve Bank’s credibility and integrity are maintained. Read more
The backdrop to South Africa’s monetary policy committee’s (MPC) meeting this week seems all too familiar.
One protracted strike has ended, but another larger one has started. The bleak growth outlook appears only to be weaker, and Moody’s, the rating agency, has issued a grim warning about the impact of industrial unrest and the potential risks to the country’s credit rating.
Yet for the first time in a while there does not appear to be a clear consensus on whether the MPC will keep rates on hold or raise them. Read more
There were no shocks or surprises from Pretoria today. Rather, South Africa’s Monetary Policy Committee agreed with the consensus among economists and kept interests rates on hold.
Its reasoning was clear – even if the committee was split 5/2 on whether to raise the repurchase rate above 5.5 per cent. The volatile rand – which had slumped dramatically against the dollar at the beginning of the year – has appreciated and been holding firm in recent weeks. The central bank’s forecast for headline inflation has also dipped slightly to 6.2 per cent in 2014 compared to its previous forecast of 6.3 per cent. Read more
As South Africa’s monetary policy committee debates whether to raise interest rates or keep them on hold this week, its members’ eyes would have been drawn to the latest inflation figures showing a slight uptick in prices.
Data released by Statistic SA on Wednesday revealed that the Consumer Purchase Index inflation rate in April hit 6.1 per cent – 0.1 per cent higher than in the previous month. It means inflation crept slightly above the 6 per cent ceiling the monetary authorities traditionally like to keep it. Read more
A bit more positive economic data from South Africa, after a mixed bag on manufacturing and mining last week.
Retail sales in February rose 3.8 per cent year on year, up from January’s revised 2.2 per cent increase – beating analysts’ expectations. And South Africa’s statistics bureau said inflation held steady at 5.9 per cent in the year to March – just a whisker below the top end of the government’s 3 to 6 per cent target range. Read more
As South Africa’s Monetary Policy Committee has been meeting this week it will have been grappling with some familiar themes: a subdued global outlook and sluggish growth at home while juggling with the trade-off between boosting economic activity and countering inflationary pressures.
It’s a balancing act the MPC has battled with for more than a year, but now a new spanner has been thrown into the works: the sharp depreciation of the rand this year (not to mention any fallout from the Cyprus banking saga.) Read more
Absa Group, the Barclays-owned South African bank, has promised to tread carefully in South Africa’s booming unsecured lending market as it announced an unexpected 9 per cent decline in full-year earnings on Tuesday.
While the drop in earnings was caused by mortgage impairments and bad property loans, the Johannesburg-based bank also said in its 2012 results that it had seen “significant losses in market share” for personal loans, but was “cautious of an aggressive expansion” to win it back. Read more
While economists wait to see what effect the recent strikes in mining and other sectors have on Q3 GDP, indicators coming out of South Africa this week are a bit deceptive. They look pretty flat – but there are signs things are getting worse.
Inflation nudged up to 5.6 per cent from 5.5 per cent in September. And a business confidence index nudged down, from 47 to 46. It doesn’t leave the Reserve Bank much room for manoeuvre on rates. Read more
By Andrew Bowman and Rob Minto
Yields on South African sovereign bonds hit their lowest level ever on Tuesday in another sign that investors think an interest rate cut is on its way.
With iffy numbers out of China adding to global gloom over the eurozone and the sluggish US economy, South Africa and other EMs are once again back in favour. Read more
South Africa’s inflation rate has eased slightly, allowing the central bank to leave interest rates unchanged and avoid action that might stifle the country’s weak economic growth.
But prices are still rising at an uncomfortably rapid rate. Consumer inflation slowed to 6.0 per cent year-on-year in March, in line with market forecasts, from 6.1 percent in February, Statistics South Africa said on Wednesday. That’s at the very top of the Reserve Bank’s 3-6 per cent target range. Read more
Three pieces of data came out of South Africa on Wednesday, revealing an economy in worse shape, on balance, than analysts had forecast – but only just.
The latest manufacturing and retail figures fell short of consensus expectations – a further blow to Africa’s largest economy after Fitch revised its outlook to negative last week. But inflation in December was lower than anticipated, albeit still at its highest level since January 2010. And Absa Capital, at least, was cautiously optimistic about the country’s macroeconomic outlook for 2012. Read more
Another day, another sign of the baleful global impact of the eurozone crisis. This time it’s the turn of South Africa where year-on-year manufacturing growth in October came in at just 1 per cent, down from 8 per cent in September.
Export-orientated industries slumped in the face of the slowdown around the world, not least the eurozone which buys roughly a third of South Africa’s manufactured goods. Read more
Slowly but surely, inflation in South Africa is creeping up. Inflation rate in Africa’s largest economy reached 6 per cent in October, up from 5.7 per cent in September and hitting the upper limit of the band set out by the central bank.
The country’s inflationary pressures have created challenges for the monetary authorities at a time when growth is being downwardly revised, while high unemployment and poverty are at the forefront of the public discourse. And while the latest CPI figures came in slightly above the consensus forecast, don’t expect the central bank to intervene – yet. Read more