With the possibility of a no Brexit deal becoming ever more realistic Theresa May has made her way to Africa, visiting Kenya, Nigeria, and South Africa. This has revealed a new tactic in Britain’s trade policy, promising investment and opportunities in a new continent to counter the effects of Brexit.
Dynasty thought –
Making sense of the tug of war between market uncertainty and investment opportunity
Following the turbulence of the UK Brexit vote and the election of Donald Trump as the president of the US in 2016, the geopolitical climate has shown few signs of settling down. The rise of a populist government in Italy, heightened trade tensions between the US and China, and a currency crash in Turkey are just a few examples of the political and economic developments sending shockwaves throughout the world.
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Global News
- John McCain will be laid to rest this weekend with eulogies from his former political rivals Barack Obama and George W. Bush – President Trump has been asked not to attend the funeral. For more on McCain and his requested eulogies, follow the link.
- The UK and European Union (EU) have reached the decision that the October deadline for the Brexit conclusion will be missed and have now set their sights on mid-November to finalise the deal.
- This week, EU Chief Negotiator Michel Barnier warned that the union must prepare for a disorderly Brexit.
- EU negotiators sought to bring an end to the Trade War with the US by proposing ending auto tariffs in exchange for the same from the US. Trump reacted to this by threatening to pull out of the World Trade Organisation.
- Trump accused Google this week (as well as Twitter and Facebook) of bias, as most media reports on the president are ‘negative’ and then suggested regulating the search engine. Google has defended their algorithm saying that search results for the president were not based on a political agenda.
- Russia and China are joining forces for what will be the most significant military exercise since the Cold War. An expert has said that this is in preparation for a possible conflict with the West, considering poor US relations.
Local News
- Over the next four years, the UK is planning on investing £8 billion (R146.36bn) in Africa, with South Africa hoping to be the biggest beneficiary of this investment.
- The brutal sell-off of Argentina and Turkey has spread to the other Emerging Markets, with South Africa being one of the most greatly effected. The rand is heading for its worst monthly performance in more than two years with one-month volatility at its highest levels since December 2016. This means that the rand is more erratic than it was at the height of the ANC leadership battle at the end of last year.
- Factors attributing to the volatility of the rand, besides from the emerging market influence, have been Theresa May’s pledge of investment and the Land Expropriation Bill being withdrawn by Parliament amid a constitutional review.
- The Producer Price Index (PPI) increased 6.1% in July year-on-year from 5.9% in June. On a monthly basis PPI rose by 0.6% in July from 0.9% in June, Stats SA said on Thursday.
- This week, the draft of the Integrated Resource Plan (IRP) 2018 was released. Its primary objective is to move away from South Africa’s reliance on coal for its electricity supply. The IRP proposes photovoltaics and wind projects be brought online, together with gas and diesel plants and potentially hydropower plants too – this presents significant opportunities for renewable energy and gas suppliers.
Source: Dynasty, Stanlib, Prescient, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc
