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News Economy (51)

The South African economy is in the midst of its longest business cycle downturn in more than 73 years, according to the Reserve Bank, and things aren't looking particularly favourable right now either.
 
The adverse business climate has impacted the stock market too this year, seeing listed companies declining year-to-date on the whole. 
 
According to analysis done by Corion Capital, a boutique hedge fund manager, 60% of listed counters had depreciated by the end of September, with more than a third slumping in excess of 15%. Only 16% of the stocks in the All Share Index gained more than 15% this year to end-September.
 
Topping the list of poor performers are Tiger Brands, off more than 40%, two healthcare companies, Aspen and Mediclinic, MTN, and Woolworths.
 
Performance of the top 40 JSE shares. Tiger Brands and Aspen were the biggest losers, while Sasol and BHP Billiton were the top performers. (Corion Capital)
Performance of the top 40 JSE shares. Tiger Brands and Aspen were the biggest losers, while Sasol and BHP Billiton were the top performers. (Corion Capital)
And the sharp sell-off has continued into October, with only the Resource Index managing to gain ground last week and the Banks Index hardest hit, losing 7%.
 
Garreth Montano, a director of Corion Capital, puts the bout of negativity swamping investor sentiment this year down to:
 
- Low GDP growth. South Africa has unfortunately missed out on a resurgence in the world economy and has been left well behind in terms of GDP growth. The reasons behind the sluggish performance of the domestic economy can be debated at length, but many view the Zuma era as a large contributor to the underperformance of SOEs, heightened corruption, lack of job creation and lack of investor confidence in attracting foreign direct investment.
 
- The land debate and mining charter have further dented prospects of new investment, which would aid growth as well as assist in creating new jobs. All of which are dearly needed.
 
- Many commentators believe that president Ramaphosa’s hands are tied until general elections, and the righting of the ship and benefits to the economy will start gaining momentum once there is more clarity around the land issue and elections are behind us.
 
To add to these internal challenges, emerging markets, as a whole, have had a difficult 2018, being largely led down by the crises in Turkey and Argentina. Trade wars have also had a negative effect, creating concerns about a drag on emerging markets exports due to potential for tariff impositions by the US, Montano says.
 
Locally the negative sentiment towards broader emerging markets has played out in large outflows fromn our bond market, as well as foreigners selling off equities, says Montano. Last week almost R6bn alone was taken out of South Africa by foreign investors.
 
These disinvestments have also played out in currency markets, driving the rand dramatically lower to more than R15 to the dollar at stages compared with its peak of almost R11.50 in February this year.
 
 
Source: Business Insider
The South African economy is in the midst of its longest business cycle downturn in more than 73 years, according to the Reserve Bank, and things aren't looking particularly favourable right now either.
 
The adverse business climate has impacted the stock market too this year, seeing listed companies declining year-to-date on the whole. 
 
According to analysis done by Corion Capital, a boutique hedge fund manager, 60% of listed counters had depreciated by the end of September, with more than a third slumping in excess of 15%. Only 16% of the stocks in the All Share Index gained more than 15% this year to end-September.
 
Topping the list of poor performers are Tiger Brands, off more than 40%, two healthcare companies, Aspen and Mediclinic, MTN, and Woolworths.
 
Performance of the top 40 JSE shares. Tiger Brands and Aspen were the biggest losers, while Sasol and BHP Billiton were the top performers. (Corion Capital)
 
Performance of the top 40 JSE shares. Tiger Brands and Aspen were the biggest losers, while Sasol and BHP Billiton were the top performers. (Corion Capital)
 
And the sharp sell-off has continued into October, with only the Resource Index managing to gain ground last week and the Banks Index hardest hit, losing 7%.
 
Garreth Montano, a director of Corion Capital, puts the bout of negativity swamping investor sentiment this year down to:
 
- Low GDP growth. South Africa has unfortunately missed out on a resurgence in the world economy and has been left well behind in terms of GDP growth. The reasons behind the sluggish performance of the domestic economy can be debated at length, but many view the Zuma era as a large contributor to the underperformance of SOEs, heightened corruption, lack of job creation and lack of investor confidence in attracting foreign direct investment.
 
- The land debate and mining charter have further dented prospects of new investment, which would aid growth as well as assist in creating new jobs. All of which are dearly needed.
 
- Many commentators believe that president Ramaphosa’s hands are tied until general elections, and the righting of the ship and benefits to the economy will start gaining momentum once there is more clarity around the land issue and elections are behind us.
 
To add to these internal challenges, emerging markets, as a whole, have had a difficult 2018, being largely led down by the crises in Turkey and Argentina. Trade wars have also had a negative effect, creating concerns about a drag on emerging markets exports due to potential for tariff impositions by the US, Montano says.
 
Locally the negative sentiment towards broader emerging markets has played out in large outflows fromn our bond market, as well as foreigners selling off equities, says Montano. Last week almost R6bn alone was taken out of South Africa by foreign investors.
 
These disinvestments have also played out in currency markets, driving the rand dramatically lower to more than R15 to the dollar at stages compared with its peak of almost R11.50 in February this year.
 
 
Source: Business Insider
Zimbabwe has appointed an independent administrator to run its loss-making national airline to try and revive its fortunes, according to an official notice.
 
Air Zimbabwe has been struggling with a $300 million debt, including to foreign creditors. Only three of its planes are operational, with another three grounded, which has forced it to abandon international routes.
 
Justice Minister Ziyambi Ziyambi appointed Harare-based chartered accountant Reggie Saruchera as administrator with powers to “raise money in any way without the authority of shareholders for the purposes of the reconstruction,” according to a government gazette published late on Friday.
 
Finance Minister Mthuli Ncube said on Friday the government was hoping to sell stakes in Air Zimbabwe and other state-owned companies under a package of reforms - though the airline has failed to attract private investors in the past.
 
The government said in April it had bought two Boeing 777 aircraft and an Embraer plane from Malaysia but added that the planes would be leased to a new local airline until Air Zimbabwe returned to profitability.
 
 
Source: News24

The Naira on Thursday appreciated marginally against the dollar at the Investors’ Window (I & E), exchanging at N363. 57, stronger than N363.94 posted on Wednesday.

The daily market turnover stood at 392.9 million dollars.

The Nigerian currency closed at N306.40 to the dollar at the official CBN window.

At the parallel market, the Naira closed at N359 to the dollar, while the Pound Sterling and the Euro closed at N478.30 and N420.

Trading at the Bureau De Change(BDC) segment saw the Naira close at N360 to the dollar, while the Pound Sterling and the Euro closed at N478.30 and N420.

Meanwhile, in spite of the continuous intervention by the Central Bank of Nigeria (CBN) at the foreign exchange market and the increase in the price of oil at the international market, the manufacturing sector witnessed slow growth in the month of September.

The manufacturing sector continued to expand in September, though at a slower pace, the latest CBN Manufacturing Purchasing Managers’ Index (PMI) report, shows.

It showed that the September Manufacturing PMI eased to 56.2 from 57.1 in August, indicating expansion in the manufacturing sector for the 18th consecutive month.

The report noted that “a composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting.”

 

Source: PMNEWSNIGERIA

US President Donald Trump tweeted on Thursday that oil prices were too high, and he called for the OPEC cartel of oil producers to "get prices down!"
Trump seemed to threaten the withdrawal of US military resources from the Middle East if OPEC members in the region didn't work to lower prices.
 
He has consistently complained that oil prices are too high.
The oil price dropped after the tweet.
US President Donald Trump on Thursday once again tweeted his belief that major oil producers in the Middle East were conspiring to keep oil prices high, and he seemed to threaten the withdrawal of military resources from the region if the OPEC cartel did not help to lower prices.
 
"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!" he said in an early-morning tweet. "We will remember. The OPEC monopoly must get prices down now!"
 
Oil prices have increased from about $50 a barrel last September to more than $70 a barrel today, with a rebalancing of supply and demand in the market as well as major weather and geopolitical events playing a part.
 
Trump has consistently complained that oil prices are too high, following a significant uptick in prices that has been passed on at the pump to US drivers.
 
High petrol prices can be an issue for voters, and Trump's attacks come just a couple of months ahead of the US midterms, where analysts say rising prices could hurt Republicans. Prices at the pump hit four-year highs back in July.
 
For this year's April-to-September driving season, the Energy Information Administration expects US petrol prices to be up 19% from a year ago, mostly because of expectations for higher crude-oil prices.
 
Bruce Whitfield: Here’s why there is no escaping high petrol prices – and what government can do to make it better
Trump sent a similar tweet in July, in which he also called the Organisation of the Petroleum Exporting Countries a monopoly and tacitly threatened to withdraw US support.
 
"The OPEC Monopoly must remember that gas prices are up & they are doing little to help," he tweeted on July 5. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s. This must be a two way street.
 
 
Source: PMNEWSNIGERIA
President of Ghana‎, Nana Akufo-Addo‎ has stressed that Nigeria needs to get it’s policy formulation and implementation right, by necessitating value addition, particularly in the oil sector.
 
Akufo-Addo, who was guest speaker at the Manufacturers Association of Nigeria, MAN 46th annual general meeting and lecture in Lagos, with the theme; “Mainstreaming Policies To Catalyze Industrial Renaissance”, was represented by Yaw Osafo-Maafo, Senior minister of Ghana, noted that Nigeria as a big brother to other African countries, need to lead in the area of policies that would make Africa economically sufficient and self-sustaining.
 
‎”Our lazy approach of always rushing to the international market to sell our resources in their raw state which fetch us peanuts must stop. It is far better to leave our resources untapped till our future generations rise up to the challenge and conscientiously develop the best policy-mix that prioritises industrialization as the most convenient cause to drive the much needed effects in our socio-economic development”.
 
‎”Why should Nigeria find it difficult to maximize the fruit of their oil industry for the benefit of her people? Our policies must of necessity move in the direction of value addition – i.e. processing of our raw materials.‎ It is all a function of how defective we have developed the appropriate policy framework to support institutionalization of mechanisms that effectively trigger a more holistic and functional industrialization policy and drive”.
 
Akufo-Addo also added that beyond policies, Africa needs to have the right economic pilots and advisory council and end an era where weak‎ boards are appointed to run strategic economic positions.
 
‎”One other challenge we face in our industrial thinking is our inability to forge and institute a strong and relevant corporate governance culture, systems and processes to drive the purpose, strategy and the vision of our business models. This often lead to the creation of weak, irrelevant boards of governors who are active and rubber stamping of what has been so determined rather than giving a strong and effective responses to counter decisions that are not in the interest of the organizational development”.
 
“Having effective policy alone is not enough. We should have men and women of substance who are resolute and driven by results and understand the policy framework guiding the business environment to play their effective advisory roles for our investment. Let us therefore begin to be circumspect with those we put at the helm of affairs as board members to advise us on the productive application of our investment”.
 
The Ghanaian ‎President did not fail to address the trade issues affecting Africa in general, while mentioning models that could propel the African continent to economic viability.
 
‎”Africa has a population of about 1.3 billion people. Yet our combined GDP is about $2.2 trillion. When we compare to USA with a population of about 328 million people with a GDP of about $18.3 trillion. Same with Europe with a population of about 743 million and a GDP of about $17.3 trillion. By population, Africa is about 4 times that of the USA. Yet, USA’s GDP is about 8times that of Africa. Yet, we are the most endowed continent on earth.
 
“This means that Africa must begin to trade among ourselves concentrating on areas of comparative advantage. We must begin to break the trade barriers among ourselves and form alliances with the various countries Associations of Industries and Chambers of Commerce of the various countries. Through these associations, we may get to know the needs of the various countries and where they are opportunities of trade”.
 
On the ‎Africa Continent Free Trade Area (AfCFTA), Akufo-Addo maintained that, the agreement is “critical to our economic development especially its ability to boost private sector multinational businesses within the framework of Public-Private Partnerships in a free movement of goods, services and people”. But, “it is important that we do not rush into taking decisions that will not have the buy-in from all critical stakeholders who drive business growth in Africa”.
 
‎”I welcome the organizers of the AfCFTA to adopt the bold strategy to undertake a wider consultation with all stakeholders in the massive sensitization and road show programme across Africa, and I am happy that this activity is done in consultation with and within the framework of the African Union Commission of Trade and Industry”, he maintained.
 
“Once we get both inter- and intra-Africa trade, investment and industrialization policy mix on the right tangent, we stand the chance of leading the new frontier to affect global industrial decisions for the interest of our people”.
 
 
Source: The Ripples

Zainab Ahmed, who is acting minister of finance, said Monday that Nigeria’s economy faced “challenging times” as she formally assumed duty.

President Muhammadu Buhari appointed her to oversee the finance ministry following the the resignation of Kemi Adeosun who resigned over forged certificate of the National Youth Service Corps (NYSC).

Ahmed, who is the Minister of State, Budget and National Planning, said the new task would require collaboration with minister officials to achieve success.

Mahmoud Isa-Dutse, permanent secretary and some directors in the ministry, welcomed her.

“These are very challenging times for our country. It means we are part of the economic team that has been charged with making sure there is economic stability in our country,” she said.

“We have very serious revenue challenges and it is up to us to shore up the revenues of this country.

“Mr President has a lot of confidence that we can do this very well together. We are working for Mr President, but at the end of the day we are working for the benefit of the citizens of our country.

“There are a lot of sacrifices that I know that you have done, and we are going to push ourselves to still do more so that at the end of the day we will say Alhamdulillah– glory be to God!

“The finance ministry has overtime been known to have very skilled personnel; from interacting with some of you, I know that there is a lot of skill set within the ministry, and that I am in good hands.

“I plan to work very closely with the whole of the directors, most especially with the permanent secretary.

“I want to declare that today the permanent secretary is my new next-of-kin. What that means is that I am going to work hand-in-gloves with him, and I expect everybody to do the same thing.

“There are some things I know about finance, but there is a lot that I don’t know; and the knowledge resides in you.”

 

Vanguard.

The Nigeria’s inflation rate has rebounded in August for the first time since January 2017 after recording 18 consecutive months of downward trend, according to the National Bureau of Statistics (NBS).

In the August inflation report by the statistics bureau on Friday, the nation’s Consumer Price Index (CPI), which measures inflation, rose by 0.09 percent points to 11.23 percent in August.

This implies the prices of goods and services rose at a faster rate in review month – just like June 2018 – when compared with July 2018.

The headline inflation had been on steady decline from 18.72 percent since January 2017 to 11.14 percent in July 2018, this was after it fell to 18.55 percent in December 2016.

In spite of the persistent decline during the period, the macroeconomic variable remained above the Central Bank of Nigeria’s (CBN) acceptable band of 6 percent to 9 percent.

The CPI measures the composite changes in the prices of consumer goods and services, such as food, transportation, and medical care, purchased by households, over a period.

The NBS said food inflation also surged to 13.16 percent YoY in August up from 12.85 percent recorded in previous month, while core inflation, which excludes agricultural produce, dropped from 10.2 percent in July to 10.0 percent in August.

The CBN had expressed fear over the possibility of a rebound in the macroeconomic indicator in the second half of 2018 as a result of increased spending ahead of the 2019 general elections.

In August, the CBN said it may consider raising its key lending rate for the first time in two years if the inflation rate worsens.

The Monetary Policy Committee (MPC) of the CBN in its July meeting had retained the Monetary Policy Rate (MPR) at record-high of 14 percent for the 11th consecutive time since 2016 to monitor the magnitude of the liquidity impact of the fiscal injection and election related expenditure.

 

The Ripples.

The free fall of equities persisted on the Nigerian Stock Exchange (NSE) in the month of August with investors net worth depreciating further by 5.86 per cent.
 
Data obtained from the exchange showed that the All-Share Index during the period shed 2,169.33 points or 5.86 per cent to close at 34,848.45 against 37,017.78 in July.
 
Also, the market capitalisation, in spite of the listing of Notore Chemical Industries, lost N687 billion or 5.12 per cent to close at N12.722 trillion compared with N13.409 trillion achieved in July.
 
Speaking on the market performance, Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University Ago-Iwoye, said the capital market performed poorly in the month of August.
 
Tella said the poor performance was caused by both local and international activities.
 
“Locally, the economy was not performing due to late budget passage and late implementation in an economy that is public sector driven.
 
“On the international scene, there were large capital outflow from the markets as foreign investors were moving money out for investment elsewhere,” Tella said.
 
He said the implementation of the budget in this quarter would likely assist in stabilising the market.
 
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd. attributed the poor performance to the political environment ahead of the next year’s general elections in the midst of dwindling macro- economic indices.
 
All share index-Aug
 
Omordion said the delayed implementation of the 2018 budget impacted negatively on the capital market and the economy in general.
 
He said the volatility experienced so far in the second half of the year was a reflection of the negative factors against the market, amidst capital flight.
 
According to him, the exit of foreign investors resulted to dwindling foreign reserve.
 
Omordion urged investors and analysts to interpret the recent scorecards from first-tier banking stocks and other stocks to reposition their portfolios ahead of third quarter.
 
He advised the Federal Government to evolve policies that would drive recovery and influence the market positively.
 
An analysis of the price movement table during the period showed that Ikeja Hotel emerged the worst performing stock in percentage terms.
 
The stock during the period lost 27.48 per cent to close at N2.27 per share against N3.13 achieved in July.
 
Other top losers’ were Law Union and Rock Insurance, GSK, Skye Bank, Forte Oil, Royal Exchange, Universal Insurance, CAP, Continental Reinsurance and Berger Paints.
 
Market Capitalisation for August
 
Conversely, Niger Insurance was the best performing stock in percentage terms with a growth of 69.23 per cent to close at 44k against 26k in July.
 
It was trailed by Portland Paints, Newest ASL, Neimeth Pharmaceuticals, AIICO Insurance, NEM Insurance, Eterna Oil, Hallmark Insurance, Transcorp and May & Baker.
 
A turnover of 5.40 billion shares valued at N66.92 billion were exchanged by investors in 68,906 deals during the period under review.
 
This represented a decrease of 19.52 per cent compared with a turnover of 6.71 billion shares worth N 73. 04 billion transacted in 84,963 deals in July.
 
An analysis of the activity chart indicated that the Financial Services Sector emerged the most active with an exchange 2.52 billion shares, valued N19.38 billion in 21,121 deals.
 
It was trailed by the Services Sector with 209.97 million shares worth N1.31 billion in 2,157 deals.
Consumer Goods sector came third with a turnover of 258.95 million shares valued at N14.02 billion in 11,252 deals.
 
 
Source: Vanguard

The Nigerian Stock Exchange (NSE) is now ranked the worst performing equities market in the African continent as the Year-to-Date (YTD) return of the All-Share Index (ASI) worsened.

The YTD return is the amount of profit generated by an investment since the beginning of the current calendar year.

The latest development was occasioned by rising uncertainties in the Nigerian economy and the recent political developments in the country which undermined investors’ sentiments.

According to the weekly pan-African stock market monitor by a Lagos-based investment house, United Capital Plc., the NSE was the worst performing stock market in Africa having recorded a YTD return of -11.3 percent as at September 3, 2018.

The Nigerian bourse was trailed by the Regional Securities Exchange (BRVM) to emerge the second worst performing stock market in the continent after recording a YTD return of -11.1 percent.

The BRVM, which covers francophone nations in the West African sub-region like Benin, Guinea Bissau, Mali, Togo, Niger, Cote d’lvoire, Burkina Faso and Senegal, offers stock trading services from its headquarters in Abidjan, while its market offices are maintained in each country.

In 2017, the NSE was ranked among the top performing stock markets in Africa, and the exchange was ranked among the five top performers in the year after Argentina, Turkey, Hong Kong and the United States, according to S&P Dow Jones Indices. The NSE-ASI grew by 42.30 percent year-on-year in 2017.

Analysts at United Capital listed Morocco Stock Exchange as the third performing capital market with -7.1 percent YTD return.

The YTD return of the Kenya’s stock market, Nairobi Securities Exchange, dropped to -2.1 percent to emerged the fourth performing bourse in the continent, while South Africa’s stock market, Johannesburg Stock Exchange (JSE), went southwards to -1.3 percent.

Conversely, the Tunis Stock Exchange (TSE) led other exchanges in the continent as its ASI rose by 33.4 percent from the beginning of the year, while Zimbabwe Stock Exchange (ZSE) and Ghana Stock Exchange (GSE) trailed with YTD returns of 21.8 percent and 7.9 percent, respectively.

Analysts at Cordros Capital advised investors in Nigeria’s stock market to trade cautiously in the short to medium term, noting that selloffs were likely to persists.

The analysts attributed the poor performance at the NSE to negative sentiments of investors, particularly the foreign portfolio investors, as a result of “contagion effect of emerging market selloffs and political concerns ahead of the 2019 elections.”

  

Source: The Ripples

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