Investor SA

Market & Investor Intelligence

News Brief

21 April 2024

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Key Economic Indicators

 

JSE and S&P 500

21/4/2024 SAST

Equity Group

Value

%Change

JSE Overall

73 364

0.13%

Resource 10

63 284

-0.02%

Industrial 25

98 701

0.29%

Financial 15

15 499

0.13%

Financial & Ind 30

96 258

0.27%

Source: Fin24.com, Business Day

 

6-Month View

Source: Financial Times

 

Currency Watch

21/4/2024 SAST

Currency

Value

%Change

Rand / Dollar

19.1259

-0.15%

Rand / Pound

23.6796

-0.09%

Rand / Euro

20.3915

-0.15%

Rand / Swiss Franc

21.0115

-0.12%

Rand – Yen

0.1238

-0.6%

Source: Fin24.com, Business Day

 

Source: XE Chart

 

Commodities

21/4/2024 SAST

Commodity

Value

%Change

Platinum

943.50

0.0%

Palladium

1,034.50

0.0%

Gold

2,391.84

+0.0%

Silver

28.68

+0.0%

Brent Crude

87.29

+0.2%

Source: Fin24.com, Business Day

Cryptocurrencies

21/4/2024 SAST

Crypto

Value

%Change

Bitcoin (USD)

64 983.67

0.44%

Ethereum (USD)

3 168.53

0.45%

Source: Business Day

 

SARB Bonds

21/4/2024 SAST

R2030

10.660

R186

9.340

SABOR

8.182

ZARONIA

8.123

 

RSA Retail Bonds

21/4/2024 SAST

FIXED RATES

2 Year Fixed Rate

9,50%

3 Year Fixed Rate

10,00%

5 Year Fixed Rate

11,25%

INFLATION LINKED RATES

Inflation Linked 3 Year Bond

4.50%

Inflation Linked 5 Year Bond

4.75%

Inflation Linked 10 Year Bond

5,25%

RSA TOP UP BOND

RSA Top Up Bond Rate

10.0%

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South Africa

South Africa Private Sector Credit

Credit: Statistics SA, Trading Economics

South Africa’s private sector credit rose by 3.32% year-on-year in February 2024, coming more than market expectations of a 3.12% increase and up from a 3.16% rise in the previous month. It marked the 32nd consecutive period of growth in private credit, although the second-softest since January 2022. Meanwhile, expansion in the broadly defined M3 measure of money supply eased to 5.71% in February, down from a revised 6.61% in the prior period and below market estimates of 5.90%.

South Africa Private Sector Credit

 

Statistics of civil cases for debt, February 2024

The total value of civil judgements recorded for debt increased by 11,3% in the three months ended February 2024 compared with the three months ended February 2023.

 

Civil summonses issued for debt

 

Civil judgements recorded for debt

The largest contributors to the 11,3% increase were civil judgements relating to:

 

·         services (contributing 5,1 percentage points);

·         ‘other’ debts (contributing 4,6 percentage points); and

·         promissory notes (contributing 2,5 percentage points).

 

Money lent was the only negative contributor (contributing -1,9 percentage points)

 

The shock price hikes in SA food basics since 2022

Credit: Nick Wilson, News24

Just over two years since Russia invaded Ukraine and sparked an inflation wildfire, South African food prices for key grocery items are on average more than a quarter higher than they were before the start of the conflict.

 

Though the South African food inflation rate has been easing in recent months, any hope for significant relief for consumers, particularly the poorest, is rapidly receding thanks to a poor local maize crop, weak rand and persistently high fuel prices.

 

Just how difficult the situation is for the most economically vulnerable is underlined by the Household Affordability Index prepared by advocacy group, Pietermaritzburg Economic Justice & Dignity (PMBEJD).

 

According to the group, the average cost of a basket of 17 core food items that are prioritised and bought first by households was R2 837.56 in January 2024. That's R498.73 more expensive than the R2 338.83 it cost them in January 2022. This was a 21% increase in the total cost of the basket. Looking at all the individual food items, the average price increase was 26%.

 

Adrian Saville, professor in economics and finance at the Gordon Institute of Business Science (GIBS), says lower income groups feel it the most when food prices rise, as food makes up the highest weighting of their household baskets on average.

 

Mervyn Abrahams, the programmes director for the PMBEJD, said SA's most vulnerable households are facing a food crisis. He points out that the situation has been exacerbated by both local and international factors. In SA, load shedding expenses, as well as the increasing costs of transporting food because of the country's failing port and rail infrastructure, have all piled up.

 

"So, the consumer is paying a premium, not just in terms of food prices but also for the collapse of our infrastructure," he says.

 

Global factors are also fuelling price hikes.

Hot Issue

SA identifies vulnerabilities of NPOs in supporting terrorist financing

Credit: Siphelele Dludla, IOL: Photo: GCIS

South Africa’s government has identified five main terrorist financing threats – including al-Qaeda and Boko Haram – that have the potential to exploit non-profit organisations (NPOs) to raise or move funds that may support terrorist organisations or be used in the carrying out of terrorist activities. This is according to the 111-page risk assessment on terrorist financing report published by the Financial Intelligence Centre (FIC), the South African Revenue Service (Sars), and the Department of Social Development (DSD) – public and private sector organisations, NPOs and umbrella organisations.

 

The risk assessment, which included a survey of 301 NPOs, data submissions from various institutions such as law enforcement, regulatory and supervisory institutions, intelligence agencies and financial institutions, made several key determinations. The assessment also describes the nature of this exploitation that may happen, and describes five inherent vulnerabilities of NPOs that may be targeted for the purpose of terrorist financing abuse – each of varying levels of significance and prevalence.

 

It identified five possible terrorist financing threats to NPOs in South Africa, saying these threats were coming from the Islamic State (IS) and its affiliates in Africa, al-Shabaab and its affiliates, including Al Sunnah Wa Jama’ah, and Nigerian terrorist groups including Boko Haram and MEND.

 

Local News Highlights

WATCH: Altron fintech household resilience index up 1.4% in Q4

Credit: Business Day TV talks to independent analyst Roelof Botha

The Altron FinTech Household Resilience Index ticked up by a marginal 1.4% in the fourth quarter, with six of the 20 constituent indicators remaining in negative territory. The data also highlighted a declining trend in the ratio of household income to debt costs, suggesting that households are buckling under the pressure of the economic climate. To unpack this in more detail, Business Day TV sat down with independent analyst Roelof Botha.

 

 

Anti-dumping duties on US chicken imports extended for five more years

Credit: Amanda Visser, The Citizen

Chicken imports from the US will remain subject to anti-dumping duties for another five years to prevent continued dumping that may cause material injury to the local industry. The International Trade Administration Commission (Itac) concluded its sunset review investigation on the anti-dumping duties imposed on frozen bone-in chicken portions from the US. It found that dumping would recur if the duties expired.

 

Crunch time for Sibanye-Stillwater

Credit: Editorial, Business Day

Sibanye-Stillwater stands at a crossroads. The mining giant’s announcement that it plans to cut as many as 3,000 jobs at its SA mines is a stark reminder of the volatility inherent in commodity markets. The move, while painful, is indicative of a broader need for a strategic overhaul to navigate the mining industry’s turbulent waters.

 

The sector is no stranger to cyclical downturns, and Sibanye has weathered its fair share. Still, the current challenges go beyond mere market fluctuations; they speak to deeper structural issues within the company and the industry at large. For Sibanye, this should not be just about short-term cost cutting but also about reimagining its future in a rapidly changing world.

 

International News Highlights

Uncertainty clouds bitcoin price ahead of imminent halving

Credit: Edward West, IOL

With the bitcoin halving just weeks away, an event widely expected to occur this month, and the price reaching all-time highs, crypto investors might consider previous halvings to see how it could affect the price, said Luno country manager for South Africa, Christo de Wit. “There are no guarantees and it is anyone’s guess whether the price will drop, rise or maintain after the April halving,” he said in a statement yesterday. “Bitcoin’s recent rally to a new all-time high has meant this cycle looks distinct from previous cycles – possibly driven by the recent institutional interest driven by the approval of bitcoin ETFs in the US,” he said. In rand terms, the price has been considerable over the past six months, more than doubling from R534 338.28 per bitcoin to R1 204 727.57 yesterday. Every four years, the rate at which new bitcoin are released into circulation gets cut by half. It’s part of a mechanism to prevent the inflationary impact that would be caused by releasing the total supply – which is capped at 21 million bitcoin – too quickly, with the last bitcoin to be mined around 2140.

 

US blocks UN from recognising Palestinian state through membership

Credit: Michelle Nichols, Business Day

The US on Thursday effectively stopped the UN from recognising a Palestinian state by casting a veto in the Security Council to deny the Palestinian Authority full membership of the world body. The US says an independent Palestinian state should be established through direct negotiations between Israel and the Palestinian Authority and not through UN action. It vetoed a draft resolution that recommended to the 193-member UN General Assembly that “the State of Palestine be admitted to membership of the UN”. Britain and Switzerland abstained, while the remaining 12 council members voted yes.

 

Heatwaves exact a heavy toll in West Africa

Credit: Boureima Balima & Abdel-Kader Mazou, Business Day

On a hospital bed in Niger, a 96-year-old woman lies motionless attached to a drip — one of thousands of possible victims of West Africa’s worst heatwave in living memory, which a report said on Thursday was linked to fossil fuel-driven climate change. In late March and early April, days and nights of extreme heat above 40° Celsius gripped many West African countries. Temperatures soared so high in Mali and Burkina Faso they equated to a once in 200-year event, according to the report on the Sahel region by World Weather Attribution (WWA).

 

World at War

Iran finds no evidence of Israeli or US airstrikes on military base

Credit: Sebastian Usher, BBC News

A military base in Iraq housing a pro-Iranian militia has been damaged in an explosion, killing one and wounding eight, security officials there have said. Iraq's military reported no drones or fighter jets in the area before or during the blast. But the militia organisation involved, the Popular Mobilisation Forces (PMF), blamed an attack. It comes amid heightened tensions between Israel and Iran. The Iraqi military also said it was investigating the cause of the explosion and fire at the base. "The air defence command report confirmed, through technical efforts and radar detection, that there was no drone or fighter jets in the air space of Babil before and during the explosion," an Iranian statement read.

 

Global Risks

Pirates are back - and bolder than ever

Credit: Compiled by Hanlie Gouws, New24/Photo: Slate

After many quiet years, piracy off the coast of Somalia has seen a marked increase in the first quarter of 2024, putting the safety of seafarers and the security of crucial trade routes at risk. The International Chamber of Commerce’s International Maritime Bureau has reported a total of 33 incidents of piracy and armed robbery occurred against ships across the world's oceans from January to March this year.

 

In the same period last year, 27 incidents in total were reported. Five of this year's incidents occurred off the waters of Somalia, where none were reported in the previous year. A total of 13 were reported in South East Asia, nine near the Indian subcontinent, and six in the Gulf of Guinea. This resurgence is characterised by bold and violent actions, including the boarding of 24 vessels, six attempted attacks, two hijackings, and one ship being fired at. In total, 35 crew members were taken hostage, nine kidnapped, and one threatened.

 

This resurgence is characterised by bold and violent actions, including the boarding of 24 vessels, six attempted attacks, two hijackings, and one ship being fired at. In total, 35 crew members were taken hostage, nine kidnapped, and one threatened.

 

According to Reuters, the Oceans Beyond Piracy monitoring group estimated their activities cost the global economy about $7 billion, including hundreds of millions of dollars in ransoms.

 

Comment/Opinion

Russia uses grain shipments to exert influence on African nations

Credit: Africa Defence Forum, GHENNA

The Russian invasion of Ukraine in early 2022 disrupted grain shipments to countries across Africa. In response, Russia has begun shipping free grain to six African countries, but those shipments come with strings attached. According to Zimbabwean economist Godfrey Kanyenze, Russia is exploiting the suffering of African citizens for its own benefit. Kanyenze is the founding director of Zimbabwe’s Labor and Economic Research Institute. It’s strategic in the sense that Russia realizes these countries are in need, and basically takes advantage of that specific need,” Kanyenze told CNN. “It’s geopolitics at play. The major string is to control or get a head start ahead of other rivals or competitors.”

 

Zimbabwe is one of six African countries to receive the free grain shipments, despite increasing its own grain production in recent years. Other Russian grain recipients include Burkina Faso, Central African Republic, Eritrea, Mali and Somalia.

 

Africa’s wheat import dependency on Russia and Ukraine

Source: GHENNA (2022) based on calculations from ITC Trade Map

 

Russia has delivered about 200,000 metric tons of grain to the six countries since November 2023. That’s a sliver of the 60 million metric tons the country exports in a year. Russia is hoping to take advantage of the food shortage it helped create and strengthen its ties with those countries.

 

Beyond the free grain shipments, Russia plans to earn $33 billion from selling food to African countries.

 

The country is also using its grain shipments to reinforce its connections with unstable countries, particularly where it has deployed Wagner Group mercenaries, now renamed as African Corps. Russian troops currently are deployed to grain recipients Burkina Faso, CAR and Mali. Russian troops are also in Libya, which is not part of the grain deal. They have also aided Sudan’s paramilitary Rapid Support Forces (RSF) in their fight with the Sudan Armed Forces (SAF).

 

Grain deliveries are just the latest way Russia has sought to exert its influence in Africa. In recent years:

 

Burkina Faso has welcomed about 100 Russian troops and a new Russian embassy.

The CAR has given Russian forces significant influence over the country’s customs, presidential security and, more recently, welcomed a Russian military base.

 

Eritrea voted against a United Nations resolution demanding that Russia withdraw its troops from Ukraine.

Mali will receive a Russian-built gold refinery.

 

Nearly a quarter of Malians are facing a food shortage due to more than a decade of fighting and displacements. About 15% of Burkina Faso residents are similarly struggling with food insecurity, according to the United Nations World Food Program.

 

Historically, about half of African countries have depended on grain imports from Russia and Ukraine to feed their populations. Eritrea and Somalia are among the African countries that sourced almost all their grain from both Russia and Ukraine before the conflict, according to the United Nations.

 

The United Nations and Turkey brokered an agreement in 2022 between Russia and Ukraine known as the Black Sea Grain Initiative that allowed 32.9 million metric tons of food to be exported from Ukraine starting in August.

 

Russia pulled out of that initiative in mid-2023 and bombed Ukraine’s ports to prevent it from shipping grain. At the same time, Russia expanded its exports. Russia has said it expects to ship another 70,000 metric tons to its African recipients this year.

 

“The war in Ukraine and the current polarized global environment can play out in different parts of Africa, including in Somalia,” Nisar Majid, who manages the Somalia country program at the London School of Economics, told Bloomberg. “And food aid becomes just part of that game.”

 

DISCLAIMER: This daily new brief provides original and aggregated content and is intended to give you, the investor, a quick overview of what is happening in the market. Sources of information are acknowledged. Contributions are greatly appreciated. Views and opinions contained herein are those of the acknowledged sources, unless otherwise stated. Investor SA cannot be held liable for any defamatory or false reporting.

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