The most critical story for South African’s this week was the appointment of Tito Mboweni as the new Finance Minister after Nhlanhla Nene stepped down. This will make him the fourth Finance Minister that we have had in two years. While this was happening, hurricanes hit both land and financial markets.
Global News
- There has been a massive selloff in international and local markets this week with tech stocks being hit hard and the S&P 500 Index falling the most since February. Since the beginning of last week, America’s tech-heavy Nasdaq has fallen by 7.5%. Amazon dropped a dramatic 14%. The Dow Jones Industrial Average lost 5% which was mirrored by most stock markets around the world.
- Fortunately, Friday has seen a partial intra-recovery as tech stocks have rebounded by +- 2% with the Dow and S&P500 following suit. Locally, the ALSI closed 2.4% higher, helped by an 8.4% rebound in Naspers.
- Donald Trump is blaming this selloff on Jerome Powell, the chairman of the Fed, saying the US central bank is “out of control”. The world’s banks jumped to the defence of the US Fed, denying Trump’s claims that the central bank had gone “loco”.
- The US Treasury Department has denied Trump’s claims that China manipulates their currency.
- There is potential that a Brexit agreement could come through as early as next week. The EU’s chief negotiator, Michel Barnier, said that a deal is “within reach”.
- Nikki Haley will quit as U.S. ambassador to the United Nations at the end of the year, President Donald Trump said in a surprise announcement Tuesday. The ex-governor of South Carolina sought to downplay speculation she might harbour presidential aspirations: “I am not running in 2020,” she said at the White House, with Trump at her side.
- The United Nations has issued a dire warning that effects of climate change which were once thought to be a century away are actually a few decades off. As every year passes, extreme weather will get more extreme, coastal floods will worsen, food prices will rise, and more species, ecosystems, and people will suffer. To avoid this level of catastrophe the world must invest $2.4 trillion in clean energy every year through to 2035 and cut coal-fired power to almost nothing by 2050. The global transition to renewable energy is likely to be the true ‘Fourth Industrial Revolution’ with both positive as well as negative disruptors.
- The latest forecast sees more than one trillion watts of renewable power being installed over the next five years. However, coal is expected to remain the largest source of power globally.
- Last week it was discovered that China had tampered with hardware issued to the US. Many companies including Apple and Amazon have found tiny chips on hardware leaving them vulnerable to hacking.
Local news
- Local news and rand directionality were dominated earlier this week by the acceptance of finance minister Nene’s resignation by President Ramaphosa, and the appointment of his replacement Tito Mboweni. The markets reacted positively to the new appointment as Mboweni is well known to rating agencies and foreign and local investors.
- This article from Daniel Silke puts a positive spin on Nhlanhla Nene stepping down.
- Steven Friedman provides analysis in the following article of Cyril’s Economic Stimulus Package still having the influence of the Gupta family on it.
Source: Dynasty, Stanlib, Prescient, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc
