This week, President Donald Trump and Prime Minister Boris Johnson put the “boy” in “boisterous”. Both Leaders came out guns blazing with President Trump calling out the Chinese saying that China continues to “rip off” the US and adding additional tariffs, and Prime Minister Johnson has acted dogmatically in keeping his eye on Brexit’s October deadline.
- President Trump escalated the trade war between the US and China by announcing that he would impose a 10% tariff on a further $300 billion in Chinese imports. This is set to hit American consumers more than any other trade war shenanigans.
- The Fed cut interest rates by 25bps, the first cut of its kind in a decade. Wall Street and President Trump were not pleased about it though, as the cut is considered to be a once-off. The Dow reacted by ending the day 335 points down (about 1.2%).
- Spending on planning for a no-deal Brexit deal has doubled to 4.2 billion pounds. The additional funds will go to border and customs infrastructure. The UK’s Treasury has estimated that the cost to the economy of a no-deal Brexit will be around 90 billion pounds.
- A Confederation of British Industry study has found that “no-one is ready for no-deal” Brexit. All industries from agri-foods and chemicals, to finance and data, to energy and logistics, to government and the EU, will suffer major disruption and economic pain for “the next decade and more” if 31 October arrives without an agreement or an extension.
- Global equity markets fell by 2-3% for the week on the back of the Fed’s hawkish tone and the tariff increases.
- South Africa’s manufacturing sentiment is at a three year high. Absa Group’s Purchasing Manager’s Index showed a 5.9 increase in a statement released on Thursday.
- HSBC has called out the public protector, Busisiwe Mkhwebane, for having financial links to the Gupta family and to Chinese Rail Company Kickbacks. “The bank flagged a payment worth over US$5,000 into Mkhwebane’s account at First National Bank in South Africa in June 2014.”
- Things are not looking good for South Africa’s investment-grade credit-rating as the deficit widens. Moody’s will announce what they decide in November 2019.
- Global investors have sold the most amount of South African equities and bonds year-to-date since 1998, amounting to a net of $4.8 billion. There have been particularly strong outflows from fixed-income securities since the start of June 2019 as concerns grow of SA’s fiscal outlook.
- Freeman Nomvalo, the CEO of the South African Institute of Chartered Accountants (SAICA), has been appointed by Pravin Gordhan to establish Eskom’s Chief Restructuring Officer’s (CRO) office.
- ANC Secretary-General Ace Magashule reiterated the ANC’s plans to nationalise the Reserve Bank. He said that the party’s position “on the nationalisation of the reserve bank has not changed”.
- South Africa’s unemployment rate is the highest it has been in a decade. It rose from 27.6% in the first quarter of 2019 to 29% in the second.
- The rand has fallen by 3% this week on the back of the global risk-off caused by the Fed’s tone and Trump’s tariffs. Despite the underpin provided by the rand-hedge stocks, the ALSI is trading down 2.3% for the week.
Source: Dynasty, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc