This week, trade war negotiations between America and China boiled over. Trump tipped over the pot, exiting negotiations and increasing tariffs. China has since retaliated. Theresa May has been asked to step down as Prime Minister and bookies are betting on Boris Johnson as her successor. Cyril Ramaphosa has maintained leadership of South Africa, and hopefully there are exciting things to come from this. Professor Ivor Sarakinsky has written an article for us analysing his potential moves.
Dynasty’s Post Election Analysis
Two weeks ago, Professor Sarakinsky provided Dynasty client’s with a pre-election analysis, this week he has written us an article on the election results and their consequences for South Africa. He addresses what sort of President Ramaphosa may be in the environment he has been voted into and what sort of sway the factions within the ANC maintain.
Follow this link for the article and if you missed it and are interested here is a link to the pre-election analysis.
Global News
- Theresa May has been forced to stand down as Prime Minister by 30 June, latest. Before she does, however, she will attempt to pass her Brexit deal through the House of Commons one last time in June (this will be the fourth attempt). On the news, the embattled pound fell to a five-month low.
- China retaliated to the tariffs the US issued against them last week Friday. The US raised tariffs from 10% to 25% on $200 billion worth of Chinese goods, they also indicated future plans to impose additional tariffs on Chinese imports up to $300 billion. China reacted by imposing 25% tariffs on $60 billion of US goods, this will start on 1 June.
- The escalating trade war has thrown into doubt the world economic rebound: fears arose that companies will withdraw investment, consumers will cut spending, and stocks will fall.
- When China announced their retaliation to US tariffs, global equity stocks dropped off by their most significant amount since January this year.
- As the trade war with China gained momentum this week, President Trump moved to restrict Huawei and ZTE Corp from selling and buying equipment, such as chips, in America. The news was followed by the US putting Huawei on a blacklist that would forbid it from doing any business with US companies.
- Despite all of the above, global markets have recovered from their mid-week sell-off and are close to flat for the week.
Local News
- President Ramaphosa has assured potential investors that the South African government is going to work on addressing economic growth. The President made these remarks at the Goldman Sachs investor conference held this week.
- Moody’s, a week after the results of the elections, said that South Africa’s long-term economic prospects remained glum. They stated that South Africa needs to move forward to tackle our credit challenges and “in the absence of effective policy change, the sovereign’s credit profile will most likely continue to erode, with fiscal strength weakening and growth remaining low”.
- Brian Molefe may be facing time in jail in connection with state capture and corruption. Further evidence is emerging of Molefe’s abuse of power while he was head of Transnet and it seems like this is just the tip of the iceberg when it comes to Molefe’s shameful dealings to enhance the wealth of himself and his friends the Gupta’s. Follow this link for more.
