A mosaic or tapestry of news was in store for us this week. Many different stories evolved as we made our trudge towards the end of 2019. In South Africa, there were new appointments to SOE leadership positions, accompanied by arrests in connection with state capture and corruption. Globally, the US passed a bill to protect protestors in Hong Kong, and the first female president of the ECB made her first public speech.
- New European Central Bank President Christine Lagarde will give her first public speech today after three weeks in the position. She will be speaking at a banking conference in Frankfurt where investors will be looking for any clues on rate policy as lower-for-longer rates keep putting pressure on lenders’ margins.
- In President Trump’s impeachment inquiry hearings this week, Gordon Sondland confirmed, in his testimony, that yes, a “quid pro quo” scheme existed and President Trump directed it.
- After the Fed cut interest rates last month, it would seem that the minutes of the meeting reinforce that rates will be held on a prolonged pause.
- China’s central bank unexpectedly trimmed their lending rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.
- Demonstrations in Hong Kong have increased in violence with protestors hiding out from police on university campuses. Meanwhile, the US Senate drew up a bill to protect human rights in Hong Kong amidst the protests. This has been met with fury by the Chinese government, who said that the US should not involve themselves in Hong Kong and Chinese affairs.
- After a disastrous interview to clarify his relations with Jeffrey Epstein, Prince Andrew has decided to step down from his public duties.
- The South African Reserve Bank (SARB) kept repo rates unchanged at 6.5% on Thursday. This was as expected, but the vote was close with three MPC members voting to hold and two favouring a 25-basis point cut.
- Andre de Ruyter has been appointed as the new CEO of Eskom. This was a surprise appointment of the current — soon to be former — CEO of Nampak. De Ruyter has also spent more than 20 years with the energy and chemicals group Sasol in several senior management roles.
- Lord Peter Hain provided testimony this week at the Zondo Commission. He gave insight into how international banks, Standard Chartered, the Bank of Baroda, and HSBC, allowed the Guptas to move their money around the world, even after the #GuptaLeaks. He said that because of this, the banks were ‘directly culpable’ in looting South Africa’s treasury.
- Eric Wood, Niven Pillay and Litha Nyhonyha, three businessmen implicated in State Capture have had their company and family trusts ordered to surrender all assets to a court-appointed curator. This came after the National Prosecuting Authority (NPA) successfully obtained a High Court order in terms of the Prevention of Organised Crime Act.
- Bongani Bongo has been arrested for corruption. He is accused of trying to ‘derail’ the inquiry into state capture at Eskom by attempting to bribe the evidence leader of the Parliamentary Commission.
- SARS is set to seize luxury vehicles and other property from former Prasa CEO, Lucky Montana. The warrants, granted by the North Gauteng High Court, are connected to about R1,8-million worth of unpaid taxes.
- Follow this link for an opinion piece on the JSE’s new CEO, Leila Fourie, where she is interviewed on her plan to implement change and growth in the JSE and South Africa as a whole.
- SA will most likely to be downgraded to junk in Q1 2020: Kevin Lings, chief economist at STANLIB, posted on Twitter that 86% of economists anticipate a downgrade from Moody’s to junk status in March next year. We have included two charts (refer below), which show how alarmingly our debt trajectory has worsened over the past number of months. The first chart was released in February 2019, whereas the second chart, produced six months later, shows a marked deterioration in the projected debt metrics. This loan debt, expressed as a % of GDP, is a graphic representation of how unreliable the treasury and budget outlines for the country have tended to become. They are no longer realistic representations of what we are able to achieve, but rather aspirational hopes where we may well continue to falter, and so doing to drop further from realistic endeavours.