President Jacob Zuma remains in office after surviving the motion of no confidence vote last week. The US and North Korea had a bizarre to and fro of nuclear threats only to have Kim Jong-un reply diplomatically – this appeared to please Donald Trump. Continue reading for a roundup of the past week’s news highlights.
Global News
- Last week, the MSCI World Index fell by 1.7%, and the MSCI Emerging Market Index dropped by 3.3%.
- Donald Trump responded to a North Korean missile test strike saying that the US will bring “fire and fury” and that they are “locked and loaded” to respond to North Korea.
- Stubbornly low inflation in the US has made it tough on the Fed to continue its interest rate hiking cycle and last week was no exception. US PPI for July surprised on the downside at 1.9% year-on-year vs. expectations of 2.2%. This was followed by lower than expected inflation print. The consensus was for an increase in prices of 1.8% in July. The actual figure of 1.7% year-on-year also surprised on the downside.
Local News
- Zuma survived his eighth motion of no confidence on Tuesday last week. There were 384 MPs available to vote, 177 voted for the motion whereas 198 voted against it, nine chose to abstain. An interesting development has been that an estimated 30 ANC MPs voted for the motion, this is in contrast to the previous votes where no ANC MPs voted against Zuma.
- In 2017, the JSE All Share Index has returned 10.7%, List Property has gained 6.8%, the All Bond Index 5.8% and cash is up 4.6%.
- Tencent, an associate of Naspers, is being investigated by the Chinese government, for inappropriate internet postings. Tencent dropped 4% on Friday, but by Monday morning it had recovered 2%.
- In the second quarter of 2017 unemployment (including people discouraged from looking for work) remained at a high 36.6%. Youth unemployment is at an appalling 67.4%.
- Social grants are only going to increase under these conditions putting further strain on South Africa’s fiscal budget. In 2010 social grants were paid to 14,624 million people, in 2015 this increased to 16,928 million people and it is estimated to increase to 17,335 million people this year.
