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

 

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

 

18 April, 2018

SA CPI Inflation recorded at the lowest level since February 2011 (3.8%)

 

10 May, 2018

The South African Mining continues to struggle and reported poor results for March, 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.

 

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.

 

21 May 2018

Nigeria’s economy continues to grow steadily, always contesting for Africa’s largest economy.

 

25 May, 2018

US Ratings agency affirms South Africa’s credit rating S&P

 

31 May, 2018

South Africa Reports a MASSIVE a trade surplus of R1.1 billion for April 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.

 

18 June, 2018

South African Rand hits fresh yearly lows against all major currencies

 

20 June, 2018

South African consumers are offered a brief respite as inflation eases.

 

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.