President Ramaphosa gave an eloquent and inspirational State of the Nation Address ( SONA ) last night and although it is difficult not to feel proud of having a President like Cyril (especially when some are led by the likes of Donald Trump) the politics of it all are still baffling. We know that we need economic growth, our unemployment rates are shocking, our education system is abhorrent, and Eskom is in need of support, but it is one thing to recognise these problems and quite another to find solutions to them. There continues to be the spark of hope that if anyone can achieve these goals, it is President Ramaphosa.
- Tensions between Iran and the US ran even higher this week as Iran destroyed a US drone. One thousand more US troops have been sent to the Middle East for “defensive purposes” said Defence Secretary Patrick Shanahan.
- After five rounds of voting, Boris Johnson and Jeremy Hunt will compete in a final runoff to replace Theresa May as Prime Minister. The pound is near this year’s low on the news that Boris Johnson may succeed as he may instigate the path to a no-deal Brexit.
- The Fed kept interest rates on hold this week but suggested that they would cut them in the upcoming months if there continued to be uncertainty surrounding the trade policy.
- Mario Draghi, European Central Bank (ECB) President, hit back at criticism from President Donald Trump on Tuesday afternoon, insisting the ECB was simply fulfilling its mandate and not engaged in currency manipulation to drive the euro down.
- Protests in Hong Kong continued this week. Protestors are demanding that the Chief Executive of Hong Kong, Carrie Lam, step down even though he did cancel the controversial deportation bill which instigated the initial protests.
- Global markets had a very strong week on the back of the ECB’s confirmation that it will consider further stimulus and as a result of President Trump’s announcement that he was to have an extended meeting with President Jinping at the G20 Summit, sparking hopes of a resolution to the trade war.
- President Cyril Ramaphosa gave his SONA last night. A highlight was that the President reinforced the message that the South African Reserve Bank (SARB) will remain independent, he also confirmed that R230 billion of support for Eskom will be provided over ten years and will be front-loaded. Essentially Ramaphosa has a seven-pronged approach to save South Africa, EWN has summarised it here. For the full speech, follow this link.
- The SARB signalled this week that they might drop interest rates, this came after they said that inflation outcomes over the past ten months mean that policy has not been as accommodating as it could have been.
- Naspers biggest investor, South Africa’s Government Employees Pension Fund, is being encouraged by its manager, the Public Investment Corp., to reduce its Naspers shareholding of about 16%, amounting to an R245 billion stake in the company. The concern is that Naspers provides overexposure to a single Chinese internet company.
- The rand strengthened by 3.5% this week, largely on the back of the positive shift in foreign sentiment. Despite the rand’s strength impacting the rand hedge component of the ALSI, the market was up 1.7% for the week, further adding to a very strong June recovery.
Source: Dynasty, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc