The rand lost 12.5% in a week, and the GDP number was expected to be +0.6 and came out at -0.7% in the midst of an Emerging Market sell-off. South Africa is now in a technical recession and to add to it SA recorded a gaping R4.6 billion deficit. President Ramaphosa has reassured that this is transitionary.
Global News
- The White House had a challenging week – from the release of Bob Woodward’s new book Fear, which details Trump’s frustration with the Russian investigation and his administration being paralysed by infighting, to an op-ed being published by the New York Times from an anonymous senior advisor saying that there is a team within the White House steering Trump from his “more misguided impulses until he is out of office.” Follow the link for more on this.
- All is not going to plan regarding Trump’s Trade War either. Signs are emerging that tariffs could be having an impact on economic growth both globally and in the US.
- This week, Amazon shares rose of 1.9% on Tuesday, briefly pushing the company over the market value of $1 trillion, Apple was the first company to reach this milestone last month.
- Colin Kaepernick – the American football player who knelt during the US National Anthem to highlight the numerous police shootings against innocent black men, and a general pain in Trump’s side – is the face of a new Nike Campaign.
- If you think that Bitcoin has hit rock bottom, you may want to reconsider. Technical indicators suggest that the worst is yet to come. The world’s largest cryptocurrency is down 65% since its peak in December 2017.
Local News
- South Africa is back in a technical recession, shrinking by 0.7% over the second quarter of 2018. Ramaphosa has said that “All these things that are happening now [are] transitional issues that are going to pass.” Follow this link for seven sobering articles on South Africa’s economic crisis.
- The rand has led the Emerging Market sell off this week and is at its lowest level in more than two years. Besides the local SA-specific factors, the weakening Argentinian peso and Turkish lira, a strengthening dollar, rising US interest rates and weakening commodity prices have all placed pressure on the rand. Despite all of these factors the rand is still not at the level, we saw in January 2016 in the aftermath of Nenegate – see chart above.
- President Xi Jinping of China, speaking at the China-Africa Co-operation Forum, has promised $60 billion in investment in Africa. The money will be split between eight massive projects, ranging from infrastructure to youth development.
- The state has intervened in September’s petrol price hike. The energy department has raised the retail margin for petrol to cover petrol-station employee wage increases but is keeping the price of all other fuels at August’s levels.
- South Africa’s economy has recorded the largest trade-balance deficit since January in July, with a trade gap of R4.6bn.
