It has been a mixed and volatile week. US stocks suffered one of their biggest single-day fall-offs this year in the middle of the week; there has been a lot of talk around whether a recession is on the horizon due to the prolonged trade war; and the first draft of the National Health Insurance bill was published. This week can be categorised by saying that there were many developments but maintained uncertainty.
Global News
- Employment hit another record high in the UK and pay is growing at the fastest rate in more than a decade, but according to the UK’s Office for National Statistics, “The jobs market remains a source of strength for the UK economy, though it may now be reaching its peak.”
- The US extended its 1 September deadline to introduce an additional 10% tariff on consumer goods imports from China to 15 December. Chinese authorities later released a statement saying that the additional tariff violates the consensus reached between the countries in Osaka, and said that because of this China would have to take the necessary countermeasures.
- The US budget deficit has already exceeded last year’s total amount. The gap grew to $866.8 billion in the first ten months of the fiscal year. That’s wider than the last fiscal year’s shortfall of US$779bn – the largest federal deficit since 2012.
- Goldman Sachs Group Inc economists said over the past weekend that fears over the US-China trade war leading to a recession are increasing, and the group no longer believes that a trade deal will be in place before the 2020 US presidential election.
- Greek stocks are positioned to have their best performances in 20 years. This is after Greece’s new leader Kyriakos Mitsotakis promised to lower taxes, enticing businesses and new investment into the market.
- As of the time of writing the S&P has recovered from Wednesday’s pull back to be 1.1% lower for the week.
Local News
- Last Thursday, the first draft of the National Health Insurance (NHI) bill was published. The draft bill is unworkable and even unconstitutional in its current form, and while the underlying intentions may be noble, it seems financially unfeasible in the absence of a clearly articulated funding model. Follow this link for more information on the NHI.
- Healthcare firms were battered by this news, with medical-aid administrators and pharmaceutical companies having R14bn wiped from their share price values.
- Public Enterprises Minister, Pravin Gordhan, has provided the guidelines for Eskom’s near-term future, saying that the primary responsibility of the new restructuring office will be to provide a recommendation to restructure Eskom’s debt.
- South African Reserve Bank Deputy Governor, Kuben Naidoo, has said that removing policy uncertainty in South Africa, allocating new broadband spectrum, and changing visa regulations, could provide the boost to the economy that South Africa so desperately needs, while simultaneously reducing the unemployment rate.
- In August, as a potential downgrade to junk looms, foreign investors have beendumping South African government bonds at a rate of almost R2-billion a day. The net total, since the beginning of August, has been R14.4 billion thus far.
- President Ramaphosa was granted an interdict to stay the implementation of Public Protector Busisiwe Mkhwebane’s remedial actions as recommended in her CR17 report against him. The judge also ruled that the president’s challenge to the PP’s report will be expedited but did not address Ramaphosa’s request for his bank statements and e-mails to be sealed until the lawfulness of how they were obtained is established.
- Despite the volatility within the week, the rand is trading very slightly stronger than it was this time last week. However, the JSE has fallen by 3%, over the same time period.
Source: Dynasty, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc
