Rand Review Quarterly Bulletin
We are pleased to present the Rand Review quarterly bulletin for Q2, 2018. The aim of the quarterly is to highlight significant South African Political & Economic events over the past 3 months and take a look at the Rands performance year-to-date,
A Summary:
The Rand weakened by 15% against the USD over the second quarter of 2018. This erased all of the gains experienced by the Rand in Q1 thanks to ANC election euphoria. This however quickly died down as the grim reality of President Cyril Ramaphosa’s mammoth task became clear. Record high Government debt, unemployment & lowering business confidence all contributed to the uncertainty in the SA economy.
Investor Confidence
To add to this, there are increasing fears focused on the potential removal property of rights as a result of a proposed change to the South African Constitution. The changes proposed will allow for the expropriation of land without compensation in South Africa. A grim prospect for any local or foreign property investor and we expect this to have an effect on foreign investment and overall property prices. This besides the fact that circle Ramaphosa has set a target to raise $100 billion in local and foreign investment for South Africa.
As it stands, the South African Rand has weakened by 11% for the first 6 months of the year. Not so good for carrytrade investors.
USDZAR performance analysis
Notable Political & Economic events from the Quarter
3 March, 2018
SA Reports a positive Trade Balance for Feb 2018 after a deficit in January
SA trade balance swings back into surplus of R430m in February https://t.co/05I72Itwma via @BDliveSA
— TradeReview (@antonvantee) April 4, 2018
10 April, 2018
World Bank forecasts a mild improvement for SA growth in 2018 and 2019. Expected to accelerate from 1.3% in 2017 to 1.4% in 2018 and 1.8% in 2019
World Bank expects mild improvement for SA growth in 2018 and 2019
According to a report, growth is expected to accelerate from 1.3% in 2017 to 1.4% in 2018 and 1.8% in 2019#Rand #ZAR #SouthAfricahttps://t.co/v3qOyEQouW via @BDliveSA— TradeReview (@antonvantee) April 10, 2018
18 April, 2018
SA CPI Inflation recorded at the lowest level since February 2011 (3.8%)
#CPI inflation down to 3,8% in March 2018, lowest level since February 2011 when it was 3,7% #StatsSA https://t.co/RgS4GeCP4U pic.twitter.com/PCRywROpVT
— Stats SA (@StatsSA) April 18, 2018
10 May, 2018
The South African Mining continues to struggle and reported poor results for March, 2018
SA mining production was down by 8,4% y/y in March 2018. The industry also produced 3,4% less in March 2018 compared with February 2018 #StatsSA Audio results: https://t.co/HaQjfLkFzt pic.twitter.com/Re8SNQ7Viw
— Stats SA (@StatsSA) May 10, 2018
14 May, 2018
The S&P 500 dividend yield just fell below the three-month Treasury bill yield for the first time since 2008. A significant shift into asset allocation approach for global fund managers.
The S&P 500 dividend yield just fell below the three-month Treasury bill yield for the first time since 2008. Great chart from @TheOneDave pic.twitter.com/KCbb5aZxZJ
— Lisa Abramowicz (@lisaabramowicz1) May 14, 2018
15 May 2018
Stats SA reports employment figures. Total unemployment & youth unemployment remain near all-time highs. A massive inhibitor to South African economic growth.
Unemployment in SA remained unchanged at 26.7% for Q1 2018. pic.twitter.com/yRmpYHdHcC
— Johann Biermann ?? (@JohannBiermann1) May 15, 2018
21 May 2018
Nigeria’s economy continues to grow steadily, always contesting for Africa’s largest economy.
#Nigeria‘s economy grew 1.95% year-on-year in the first quarter, which was slower than expected. Bloomberg consensus was 2.6%. #Oil led the way, with the non-oil sector barely growing (0.76%). pic.twitter.com/NjljJ47JOt
— Paul Wallace (@PaulWallace123) May 21, 2018
25 May, 2018
US Ratings agency affirms South Africa’s credit rating S&P
As expected, S&P Global kept SA ratings and outlook unchanged. More work to be done. https://t.co/RcCI852taP
— Hugo Pienaar (@hugopien) May 26, 2018
31 May, 2018
South Africa Reports a MASSIVE a trade surplus of R1.1 billion for April 2018.
South Africa Reported a trade surplus of R1.1billion for April 2018#SouthAfrica#Trade#Rand pic.twitter.com/V2RlC3IeGh
— TradeReview (@antonvantee) May 31, 2018
5 June, 2018
More disappointing data as Stats SA reports South African Q1 2018 GDP negative growth reported at -2.2%. The South African economy inches closer to a recession due to repeat poor performance in the first quarter of the year. Q1 2017 also reported negative GDP growth.
South African Q1 2018 #GDP growth reported at -2.2%
Q1 of 2016 & 2017 were reported as negative growth and thus this marks the 3rd consecutive year to kick off with negative growth.
Largest negative contributors were#Agriculture (-24.2%)#Mining (-9.9%)#Manufacturing (-6.4%) pic.twitter.com/PpfCBoPaEQ
— TradeReview (@antonvantee) June 5, 2018
18 June, 2018
South African Rand hits fresh yearly lows against all major currencies
South African Rand hits fresh yearly lows against all major currencies
Current rates:
USDZAR: 13.68
EURZAR: 15.86
GBPZAR: 18.09As the Emerging Market sell off continues, SA won’t be spared.#Rand #ZAR pic.twitter.com/Cof9PzAFTM
— TradeReview (@antonvantee) June 18, 2018
20 June, 2018
South African consumers are offered a brief respite as inflation eases.
Surprise dip in inflation offers relief to consumers
May inflation reported at 4.4%, down from April’s 4.5%https://t.co/SDEq3TBRD9 via @BDliveSA— TradeReview (@antonvantee) June 20, 2018
24 June, 2018
South Africa is often compared to Turkey in terms of Emerging market growth potential end economic size so we thought we’d include this notable event. The recent developments around constitutional amendments in Turkey show the volatile times the country faces with Erdogan securing a very long term. If you’re looking for any signals on how the market reacted to this news, take a look at the Turkish Lira performance against any major currency since June the 24th, 2018.
— The Spectator Index (@spectatorindex) June 24, 2018