Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/07/25/china-xi-and-india-modi-lend-to-africa-ahead-of-brics-summit.html">China and India launch investment spree in Africa ahead of key summit</a>
<ul>
<li>Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have committed loans to several African countries this week.</li>
<li>On Tuesday Xi pledged $14.7 billion to South Africa, while Modi announced that Uganda would receive $200 million.</li>
<li>China is far more prevalent on the African continent than India.</li>
<li>Both Xi and Modi will attend a three day BRICS summit in South Africa which starts on Wednesday.</li>
</ul>
<img loading="lazy" decoding="async" src="https://d16akly8855cs7.cloudfront.net/wp-content/uploads/2018/07/26140237/105351685-1532520817860gettyimages-1007053200.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Sheng Jiapeng | China News Service | VCG"/>
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have continued to lend in tandem to African countries ahead of a major emerging markets summit in Johannesburg, South Africa, beginning on Wednesday.
Xi, arriving in South Africa on Tuesday, pledged $14.7 billion of investment to the country.
His South African counterpart Cyril Ramaphosa is attempting to reboot the country’s economy after years of mismanagement and stagnation under former President Jacob Zuma. Ramaphosa’s target is to raise $100 billion in foreign investment.
The South African 
rand 
 rose 1 percent on the news of China’s commitment, according to Reuters.
$2.8 billion of China’s cash will be siphoned off into South Africa’s primary state utility Eskom. The struggling public firm reported a $171 million full-year loss on Monday.
Modi’s lending on behalf of India has been more modest, as the world’s fastest-growing major economy trails China’s ubiquity on the African continent.
During a flying visit to Uganda, Modi pledged $205 million to the East African country. The sum is intended to help Uganda develop its dominant agricultural sector and electricity distribution infrastructure.
‘Alternatives to the West’
Both Xi and Modi were in 
Rwanda 
 earlier this week, where a total of over $300 million was announced in loans. The money will develop the tiny, landlocked East African nation’s agriculture, roads and special economic zones.
Analysts CNBC spoke to read the news as Rwandan President Paul Kagame sending a defiant message to the U.S. over trade, amid an ongoing 
spat 
 over second-hand clothes.
TWEET
Among African countries, “China and India are viewed as alternatives to the West,” Anna Rosenberg, research director at emerging markets advisory firm Frontier Strategy Group, told CNBC via e-mail.
“Since economic growth has accelerated and interest from other emerging markets has picked up, African governments are glad to have more choice among those that are willing to support development efforts.”
While China’s ready capital dwarfs that provided by India, the latter country can share its technological advances with Africa, Munish Gupta, vice president of the India Chamber of Commerce, told CNBC Africa. “Today, China shares very little of its technology with the rest of the world,” he said.
Rosenberg added that given China’s prominence on the African continent, countries were “now well aware of the strings attached” to business deals. Meanwhile, “Africans are well exposed to Indian work culture,” she said, given that “there are many African/Indian run distribution companies across the continent, especially in East Africa, typically run by locals of Indian descent.”
Xi and Modi are to attend a three day 
BRICS 
 (Brazil, Russia, India, China and South Africa) summit, uniting the leaders of the bloc which encompasses the five emerging economies.
Brazilian President Michel Temer and Russian President Vladimir Putin will also be joining host Ramaphosa. Trade, given the current climate of U.S.-China import tariffs, is 
set to dominate the agenda 
.

China and India launch investment spree in Africa ahead of key summit

Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/07/25/china-xi-and-india-modi-lend-to-africa-ahead-of-brics-summit.html">China and India launch investment spree in Africa ahead of key summit</a>
<ul>
<li>Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have committed loans to several African countries this week.</li>
<li>On Tuesday Xi pledged $14.7 billion to South Africa, while Modi announced that Uganda would receive $200 million.</li>
<li>China is far more prevalent on the African continent than India.</li>
<li>Both Xi and Modi will attend a three day BRICS summit in South Africa which starts on Wednesday.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/07/26140237/105351685-1532520817860gettyimages-1007053200.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Sheng Jiapeng | China News Service | VCG"/>
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have continued to lend in tandem to African countries ahead of a major emerging markets summit in Johannesburg, South Africa, beginning on Wednesday.
Xi, arriving in South Africa on Tuesday, pledged $14.7 billion of investment to the country.
His South African counterpart Cyril Ramaphosa is attempting to reboot the country’s economy after years of mismanagement and stagnation under former President Jacob Zuma. Ramaphosa’s target is to raise $100 billion in foreign investment.
The South African 
rand 
 rose 1 percent on the news of China’s commitment, according to Reuters.
$2.8 billion of China’s cash will be siphoned off into South Africa’s primary state utility Eskom. The struggling public firm reported a $171 million full-year loss on Monday.
Modi’s lending on behalf of India has been more modest, as the world’s fastest-growing major economy trails China’s ubiquity on the African continent.
During a flying visit to Uganda, Modi pledged $205 million to the East African country. The sum is intended to help Uganda develop its dominant agricultural sector and electricity distribution infrastructure.
‘Alternatives to the West’
Both Xi and Modi were in 
Rwanda 
 earlier this week, where a total of over $300 million was announced in loans. The money will develop the tiny, landlocked East African nation’s agriculture, roads and special economic zones.
Analysts CNBC spoke to read the news as Rwandan President Paul Kagame sending a defiant message to the U.S. over trade, amid an ongoing 
spat 
 over second-hand clothes.
TWEET
Among African countries, “China and India are viewed as alternatives to the West,” Anna Rosenberg, research director at emerging markets advisory firm Frontier Strategy Group, told CNBC via e-mail.
“Since economic growth has accelerated and interest from other emerging markets has picked up, African governments are glad to have more choice among those that are willing to support development efforts.”
While China’s ready capital dwarfs that provided by India, the latter country can share its technological advances with Africa, Munish Gupta, vice president of the India Chamber of Commerce, told CNBC Africa. “Today, China shares very little of its technology with the rest of the world,” he said.
Rosenberg added that given China’s prominence on the African continent, countries were “now well aware of the strings attached” to business deals. Meanwhile, “Africans are well exposed to Indian work culture,” she said, given that “there are many African/Indian run distribution companies across the continent, especially in East Africa, typically run by locals of Indian descent.”
Xi and Modi are to attend a three day 
BRICS 
 (Brazil, Russia, India, China and South Africa) summit, uniting the leaders of the bloc which encompasses the five emerging economies.
Brazilian President Michel Temer and Russian President Vladimir Putin will also be joining host Ramaphosa. Trade, given the current climate of U.S.-China import tariffs, is 
set to dominate the agenda 
.

South Africa’s rand hit a fresh three-year high against a weaker dollar in early trade on Monday, amid talk that President Cyril Ramaphosa is likely to announce a new cabinet this week.
<img loading="lazy" decoding="async" class="aligncenter wp-image-298976 size-full" src="http://cnbc.africa/wp-content/uploads/2018/02/Rands-Wikipedia.jpg" alt="" width="800" height="639" />
At 0627 GMT, the rand was at 11.5300 per dollar, 0.11 percent firmer than its New York close on Friday.
The currency hit 11.5100/dollar earlier in the session, its firmest since February 2015.
Ramaphosa has said he is considering a cabinet reshuffle after replacing former leader Jacob Zuma. The former president’s nine-year rule was marred by a series of scandals. Ramaphosa has pledged to fight official corruption.
In fixed income, the yield on the benchmark government bond due in 2026 fell 4 basis points to 7.995 percent, reflecting stronger bond prices.
<div class="Attribution_container_28wm1">
<div class="Attribution_attribution_o4ojT">
Reporting by Olivia Kumwenda-Mtambo; Editing by Biju Dwarakanath
</div>
</div>

South Africa’s rand hits 3-yr high against dollar

Bianca Botes | Peregrine Treasury Solutions
It was an eventful week in local markets with the State of the Nation Address (SONA) taking place in Parliament on 16 February 2018 followed by the highly-anticipated National Budget Speech, presented by embattled Finance Minister Malusi Gigaba on 21 February. South Africa impressed ratings agencies with the Budget Speech on Wednesday, with all three agencies stating that they are satisfied and optimistic following the presentation.
<div id="attachment_298976" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-298976" class="wp-image-298976 size-full" src="http://cnbc.africa/wp-content/uploads/2018/02/Rands-Wikipedia.jpg" alt="" width="800" height="639" />KONICA MINOLTA DIGITAL CAMERA</div>
The rand started the week off on a strong footing, trading around R11.60 before retreating slightly to R11.75 on Tuesday as the US dollar gained momentum. However, the greenback’s momentum, coupled with the underperformance of emerging markets, could not hold the rand down as Gigaba announced a rise in VAT from 14% to 15%, a move many deem “risky” for the governing party in light of the upcoming 2019 national elections. That said, this move indicates government’s commitment to making hard choices to ensure a strong economy that, in time, will benefit all.
A couple of weeks ago the market largely anticipated a downgrade by Moody’s, given a political landscape that seemed to be dire under the rule of erstwhile president Jacob Zuma. However, since then key political events, including a new head of state in President Cyril Ramaphosa and a market-positive SONA and Budget, has certainly turned the tables. For now a downgrade is being almost completely discounted. The current political environment, coupled with a rise in commodity prices, has created a rand strength bias in the short to medium term.
A word of caution however: We are still in a global market in which the United States Federal Reserve (Fed) is largely anticipated to increase interest rates, and a local environment where there is high unemployment and sluggish economic growth. Therefore, a correction in the rand can be expected. The range for the week ahead is between R11.60 and R11.80, with a longer-term view of a break above R12.10.
Local consumer price inflation figures, which were released on Wednesday, showed a decline of inflation to the lowest levels since September 2015, coming in at 4.6%. However, the South African Reserve Bank is expected to keep interest rates on hold for the time being, with a Reuters poll indicating that the next potential cut is only expected in November.
The stronger US dollar damped most commodity prices over the week, with oil dipping back down to the US$60 mark over concerns around supply stockpiles, while gold fell by 0.1%. A hawkish Fed is expected to add some pressure to commodity and equity markets, and volatility is largely expected.
In equities, the JSE tracked the global market down most of the week, briefly turning the tide to close up on Wednesday afternoon. Following the Budget Speech the All-Share Index saw a rise of 1.17% while the Top 40 clawed its way higher by 1.39%, with the biggest movement taking place among financial institutions. The expected monetary tightening by the Fed put a damper on international equity markets, pushing the S&amp;P500 to fall by 0.2% while the FTSE Index gave up 1%.

Market Update: Eventful week sees rand firm and JSE trend lower

South Africa’s rand was a touch weaker in early deals on Wednesday as traders refrained from making any large moves ahead of the budget speech later in the day.
<div id="attachment_298976" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-298976" class="wp-image-298976 size-full" src="http://cnbc.africa/wp-content/uploads/2018/02/Rands-Wikipedia.jpg" alt="" width="800" height="639" />KONICA MINOLTA DIGITAL CAMERA</div>
At 0655 GMT, the rand traded at 11.75 versus the dollar, 0.17 percent weaker from its overnight close in New York.
<div class="DPSlot_container_2dHIN StandardArticleBody_dp-slot-inline_eUPBt" data-ad-type="other"></div>
NKC African Economics expects the currency to trade in an 11.60-11.95/dollar range.
Investors are also focusing on an expected cabinet shake-up under new President Cyril Ramaphosa and the future of Finance Minister Malusi Gigaba, who is due to deliver the budget speech in the afternoon.
Stocks opened little with the benchmark JSE-Top 40 index at 51,071.
In fixed income, government bonds were flat, with the yield on the benchmark instrument due in 2026 ZAR186= at 8.10 percent.
<div class="Attribution_container_28wm1">
<div class="Attribution_attribution_o4ojT">
Reporting by Tiisetso Motsoeneng; Editing by Raissa Kasolowsky
</div>
</div>

South African rand slightly weaker ahead of budget speech

South Africa’s rand was little changed in early deals on Thursday, largely holding on to gains notched up overnight after President Jacob Zuma resigned.
<div id="attachment_298976" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-298976" class="wp-image-298976 size-full" src="http://cnbc.africa/wp-content/uploads/2018/02/Rands-Wikipedia.jpg" alt="" width="800" height="639" />KONICA MINOLTA DIGITAL CAMERA</div>
* At 0608 GMT, the rand was at 11.7300 against the dollar, barely changed from its overnight close 11.7200 in New York and not far from levels last seen in March 2015.
* The rand has been rising since December last year on signs that Zuma &#8211; under whose tenure Africa’s most advanced economy has hardly expanded &#8211; could be ousted even before his second term as president ends in 2019.
* The 75-year old leader resigned on Wednesday, reluctantly heeding orders by the ruling African National Congress to bring an end to his nine scandal-plagued years in power.
* “The removal of President Zuma is the end of the beginning, not the beginning of the end. Financial markets, investors and business owners are not going to be distracted by the early removal of yet another sitting president for much longer and the attention will turn to what the new order intends to do and when it will do it,” NKC African Economics said.
<div class="Attribution_container_28wm1">
<div class="Attribution_attribution_o4ojT">
Reporting by Tiisetso Motsoeneng; Editing by Biju Dwarakanath
</div>
</div>

South African rand hovers near 3-yr highs after Zuma quits

South Africa’s rand firmed on Wednesday on expectations President Jacob Zuma would offer his formal resignation after the ruling African National Congress (ANC) party ordered the 75-year old to step down.
<div id="attachment_125932" style="width: 740px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-125932" class="wp-image-125932 size-full" src="http://cnbc.africa/wp-content/uploads/2017/05/Rand-shutterstock1.jpeg" alt="" width="730" height="425" />Photo: Shutterstock.</div>
At 0714 GMT, the rand was 0.8 percent firmer at 11.8590 to the dollar.
Zuma is expected to respond on Wednesday to the ANC’s order to step down as head of state, party officials said, after the party gave him no firm deadline to resign.
“After waiting for so long for such a major event, we still think that a formal resignation/removal will trigger some sharp gains, even if only temporarily,” Rand Merchant Bank analyst John Cairns said in a note.
The presidency told the media on Wednesday to “await official notification” of a briefing by Zuma, amid expectations of his resignation.
Gains were supported after a police unit raided the home of the Gupta family, wealthy friends of Zuma, with local police reporting that one member of the family has been arrested.
The Guptas are accused by the public anti-graft watchdog of using their friendship with Zuma to influence policy and amass wealth. They have denied any wrongdoing.
Bonds were stronger with the yield on the benchmark 2026 government issue down 5.5 basis points to 8.400 percent.
Stocks were firmer, with the Johannesburg bourse’s index of 40 blue-chip stocks up 0.3 percent to 50,540 points, while the All-Share index lifted 0.21 percent to 57,330 points
<div class="Attribution_container_28wm1">
<div class="Attribution_attribution_o4ojT">
Reporting by Tanisha Heiberg; Editing by Edmund Blair
</div>
</div>

South African rand firms on talk Zuma will resign, Gupta arrest

Jameel Ahmad | FXTM
As the financial markets conclude the first month of trading for 2018, the South African Rand has not only managed to hang on to its gains from the aftermath of the December 2017 ANC Conference, but generated further strength. This time, the encouraging momentum for the Rand has not been inspired by domestic headlines, but by continued weakness in the US Dollar.
<div id="attachment_125932" style="width: 740px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-125932" class="wp-image-125932 size-full" src="http://cnbc.africa/wp-content/uploads/2017/05/Rand-shutterstock1.jpeg" alt="" width="730" height="425" />Photo: Shutterstock.</div>
Despite suffering its worst year in 2017 since 2003 with losses above 9%, 2018 has seen the US currency follow a similar trend. The Dollar Index has already declined a further 3.2% year-to-date (YTD), with the Greenback weakening to its lowest level since December 2014 in the early hours of January 25. In response to the Dollar weakness, the Rand has climbed 3.85% and is seen as the fifth best performing major as of writing.
All current indications suggest that the Dollar is at threat of resuming its downfall as time progresses, representing an opportunity for the South African Rand to continue its resurgence.
Reasons for the USD fire selling are widespread; one of the most interesting aspects is increasing confidence that the global economy is catching up with the United States. Optimism over global growth has not been this high since before the global financial crisis, and there are expectations that the likes of the European Central Bank (ECB) and Bank of Japan (BoJ) could be about to follow in the footsteps of the Federal Reserve by beginning the process to normalize monetary policy. Although policy normalization in the developed world was previously thought to be a risk for the emerging markets it is actually working in the favour of emerging market currencies so far – weakening the ‘pull’ factor for the Dollar when other developed currencies like the Euro or Japanese Yen potentially offer yield that has not yet been priced into the market.
Another factor that appears to be supporting the prolonged bearish sentiment in the US Dollar is the fear of President Trump stepping up his protectionist narrative. The pledge to put “America first, and always” is seen as an unknown risk for a global economy that has not looked as positive since the global financial crisis, and could now threaten investor confidence in the US Dollar even further.
The weakening Dollar will play into the hands of the US President, who has in the past been explicit in his comments that the USD is “too strong”. It also represents an opportunity for many different currencies around the globe to strengthen to levels not seen since the days of the Federal Reserve signaling to the financial markets that it was preparing to eventually raise US interest rates, something that stretches all the way back to the USD strength that began late 2014.

Rand benefits from ongoing acceleration in Dollar selling

South Africa’s rand weakened early on Monday as the leadership race for the new leader of the ruling African National Congress gathered momentum, with the largest voting bloc expected to signal its preferred candidate this week.
<div id="attachment_121833" style="width: 810px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-121833" class="wp-image-121833 size-full" src="http://cnbc.africa/wp-content/uploads/2017/05/Rand-Wikipedia.jpg" alt="" width="800" height="639" />Photo: Wikipedia.</div>
At 0709 GMT, the rand traded at 13.7950 versus the dollar, down 0.4 percent from its New York close on Friday.
“As provinces submit their nominations for the ANC leadership conference, expect political noise to persist,” lender Nedbank said in a note.
The rand advanced 3 percent last week as South Africa escaped a potentially painful double downgrade of its credit ratings and on indications that Deputy President Cyril Ramaphosa was doing well in nominations for leader of the ANC.
Ramaphosa is seen as the more market-friendly candidate for the ruling party’s top job, but Kwazulu-Natal, the province with the most delegates and home to rival Nkosazana-Dlamini Zuma &#8211; has yet to announce its preferred successor to President Jacob Zuma.
The ANC is set to elect a new leader at a national conference later this month.
Stocks opened firmer at 0700 GMT, with the JSE securities exchange’s benchmark Top-40 index up 1 percent by 0709 GMT.
Government bonds were slightly weaker in early trade, with the yield for the benchmark instrument due in 2026 up 3.5 basis points to 9.36 percent.
<div class="Attribution_attribution_o4ojT" data-reactid="47">
Reporting by TJ Strydom; Editing by Toby Chopra; Editing by Toby Chopra
</div>

South Africa’s rand weaker as ruling party’s succession race gathers steam, stocks firmer

This comment piece was written by Charlie Robertson, Global Chief Economist, Renaissance Capital
Uuumm .. that’s a toughie.  But we really should know so we can drop it into conversation in a casually cool way – I always find listing the 54 African countries by GDP in 2017 makes me pretty popular – and I want to give you too the chance to gain a reputation for exciting repartee.
What do we know ? Based on the dodgy exchange rates being used in Egypt until November 2016 and in Nigeria/Ethiopia/Angola etc all year – Nigeria was the largest economy in Africa in 2016, followed by Egypt and then SA.  All of Africa had a similar GDP to India, but was not as big as California. That goes a long way to explaining relative news coverage.
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-287920" src="http://cnbc.africa/wp-content/uploads/2017/10/RM1.jpg" alt="" width="875" height="427" /> 
Source: IMF with a little help from Renaissance Capital
What about 2017 ? “We have a problem here Captain” as Scottie would have said because we just worked out that the IMF is using an average exchange rate for Nigeria of 304/$ for its GDP estimates. Now I like the IMF resident a lot – but I think this is hard to justify. The I and E fx window rate has averaged 368/$ from 25 April to 11 October. What about Jan-Apr? Do we use the parallel market rate that hit as weak as 520/$ in early 2017, or the Naira rate quoted on Bloomberg which was 313/$ ? In the graph below, we show both Nigeria using the IMF figure, and Nigeria using a 367/$ average. If you believe the IMF, Nigeria was number 1. If you think 367/$ is more realistic, it was number 2 and SA swept past both Egypt* and Nigeria to take number 1 slot again. Humble South Africans can once again stand tall, arm in arm with President Zuma, a man who has helped ensure per capita GDP in 2017 is not above the lofty heights it achieved in 2007. To be fair to Zuma, Brexit has helped push UK per capita GDP back to below 2006 levels. This must be a deliberate part of the UK charm offensive to rebuild links to the old Empire so that will help make Britain great again. 
 
*at least Nigeria has an IMF implied exchange rate, Egypt doesn’t let the IMF publish one, so you are relying on us for that figure 
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-287923" src="http://cnbc.africa/wp-content/uploads/2017/10/RM2.jpg" alt="" width="482" height="300" />
Meanwhile Ethiopia cleverly timed its devaluation until just after the IMF publication so it can lay claim to 8th place .. when the deval probably means it is 9th behind Kenya.
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-287924" src="http://cnbc.africa/wp-content/uploads/2017/10/RM32.jpg" alt="" width="908" height="524" />
Source: IMF with a lot more interference from RenCap in this one
What about GDP per capita ? Nigeria, Kenya, Ghana, Ivory Coast are all in roughly the same place – just ahead of Bangladesh &#8211; with wealth levels double that of Rwanda or Uganda. Of these, Kenya, Ghana and southern Nigeria are best placed to industrialize in the same way that southern Bangladesh has.
I tested this last chart on twitter and the instant response is … “not Equatorial Guinea”. Fair enough, the average per capita GDP may bear no relation at all to GDP per person once the boss has nabbed all the oil wealth. But the point is, India is mid-way between countries like Egypt, Nigeria, Ghana and Kenya, and positive themes should be found in a few of them.
Re the Kenyan elections – what we heard at our East Africa conference is that President Kenyatta would probably win a re-run, especially if Odinga boycotted the second round.
<img loading="lazy" decoding="async" class="alignnone size-full wp-image-287919" src="http://cnbc.africa/wp-content/uploads/2017/10/RM4.jpg" alt="" width="980" height="543" /> 
Source: IMF, Renaissance Capital, World Bank (for Somalia population)
CONCLUSION: GDP per capita has probably bottomed now in Egypt, Nigeria and a fair few others. The next move should be up again as we enter 2018. Nigeria may have lost out to SA in terms of being the largest economy in Africa in 2017 (let’s see what happens to the ZAR by year-end) but this SA resurgence won’t last for too long. We continue to see Morocco, Egypt, Tunisia, Ghana and Kenya as among those best placed to industrialize in the coming years.

Africa’s economies ranked by GDP, which is really the largest?

South Africa&#8217;s rand inched up in early trade on Friday after the Reserve Bank kept rates on hold, and despite a less dovish than expected policy statement from the central bank as well as a global retreat in other commodity-dependent currencies.
At 0640 GMT, the rand had firmed 0.14 percent to 12.9075 per dollar, slightly off 2-month high touched early in previous session, following an overnight close of 12.9250.
Commodity currencies remained wobbly as oil prices extended falls after tumbling on Thursday, when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs.
South Africa&#8217;s central bank on Thursday kept interest rates steady, playing down prospects of cheaper borrowing costs as it weighed price pressures against expectations that the struggling economy will recover more slowly than hoped.
South African Reserve Bank (SARB) governor Lesetja Kganyago said the longer-term inflation trajectory was &#8220;uncomfortably close to the upper end&#8221; of the bank&#8217;s target range of 3-6 percent.
&#8220;The SARB MPC was a little disappointing to those looking for signals on a rate cut,&#8221; said currency strategist at Rand Merchant Bank John Cairns in a note.
Stocks were set to open lower at 0700 GMT, with the JSE securities exchange&#8217;s Top-40 futures index down 0.2 percent.
In fixed income, the yield for the benchmark government bond due in 2026 inched up 0.5 basis points to 8.515 percent.
(Reporting by Mfuneko Toyana; Editing by Louise Ireland)
&nbsp;

South Africa’s rand firm as central bank keeps interest rates on hold

2017 outlook: We expect the marked divergence to continue between what asset prices can do and what goes on in terms of macroeconomics, risk events and politics. Put simply, we expect some recovery in headline real GDP growth, albeit still shrinking per capita income growth, with the ANC elective conference dominating throughout the year to December. However, with South Africa looking somewhat better than peers such as Turkey, we believe asset prices and ZAR especially can do ‘ok’ until potential downgrades come – the timing of which remains uncertain, if still on the horizon.
<h2>Forecast overview</h2>
Are we bullish or bearish for 2017? This is a difficult question. We are only marginally below consensus forecasts for the coming two years on growth (though below official estimates marginally); we are roughly in line with them on CPI inflation (though above the SARB). That might be described as fairly neutral.
However, in 2016 the market appeared to define a narrative of “off the bottom” as being positive because we have passed the worst of the height of the Nene-gate impact on the economy. We think this is true – and the economy showed its resilience by not going into recession in 2016 despite all the political negativity – as we forecast a year ago. We think in 2017 the key investor question will be “what are the drivers of growth?” We think the answer is likely to be a very loud in 2017: “not much at all”. Indeed, in 2017 we believe the market will become more disappointed about the reforms already proposed and the lack of meaningful new ones forthcoming. Political constraints on government in this area may become more obvious as growth remains low in absolute terms and vs peers and as unemployment grinds higher as the level of employment grows far too slowly to absorb the bulging labour force. The negative effects of a national minimum wage should start to appear, although in our opinion, these will only become evident in the years after as data and studies emerge. Overall, we think negative per capita income growth and negative TFP growth will be the ‘low lights’ of the year in data terms. Looking at it in this way, we are not off the bottom and real incomes are still falling. The market should be more sceptical of official spin on such matters in 2017.
READ: <a href="/news/southern-africa/2015/12/22/sa-economic-insight-2016/">South Africa&#8217;s 2016 risk report, forecast update &#8211; CNBC Africa﻿</a>
We expect politics to remain very noisy, but the market has largely become bored of attempting to follow the intricacies of the ANC’s internal machinations. We think the markets will still overplay the tail risk of Zumxit, even though this seems highly unlikely before the December elective conference. In our opinion, internal compromises keeping Jacob Zuma in office after the November ANC NEC meeting will prevent PGxit; however, we believe there is a meaningful (if difficult to pin down) likelihood of a wider reshuffle that could shock the market.
South Africa however is not as dramatic a risk case at all vs peers and especially Turkey for 2016. Hence, we see South Africa outperforming Turkey at least in H1 2017 or longer if the TCMB’s credibility does not recover. If Turkey overcomes its current obstacle to the executive Presidency by mid-year this should allow the market to focus more on South Africa politics in the region in H2 in the run-up to the ANC elective conference in December.
Broadly, we see more of a magnified focus on EM under a Trump Presidency with the prospect of higher US policy rates and a stronger USD, which should weigh on South Africa as a dual-deficit country, albeit maybe less so than some of its peers. We see little meaningful upside of US policy on US growth in 2017 and hence are unable to be over-enthusiastic about it and the positive effects on South Africa, especially with a weaker Asia and prospects of US protectionism. The real unknown for 2017 is if South Africa’s yield offering – which since the US elections has provided adequate compensation – will still be protective enough. We think the curve may have to steepen somewhat, but again can outperform peers.
Ratings again will be an important factor wrapping together medium run growth and fiscal risks as well as the noise from parastatals. Indeed the ebb and flow of events around Eskom, particularly with regard to the issues of contingent liabilities and its nuclear build programme will dominate again.
In summary, with inflation likely to move lower (but less dramatically than expected by the market previously), growth grinding slightly higher and the labour market stabilising at a (very) weak level, 2017 might be described as ‘ok’, but from a developmental and inequality perspective will not be positive and result in another challenging year.
<h2>Risk timeline</h2>
<img loading="lazy" decoding="async" src="/media/19295733/nomura2_600x504.jpg" width="600" height="504" alt="Nomura2"/>﻿
Putting all this together we see several broad sweeps of risk narrative:
Political from President Zuma consolidating at the8 JanuaryANC anniversary celebrations through to the elective conference at thestartofDecembervia the endJune/start JulyANC policy and consultative conference. The9 FebruaryState of the Nation Address from President Zuma, as in previous years, will be an important marker. We then see reshuffle risk throughend Januaryand start February. We also need to keep a continual watch on ANC splits within parliament.
A fiscal and ratings narrative arch encompassing the Budget expected in thelast week of February, ratings updates to come betweenApril and June(in a longer period than 2016 which saw the agencies more tightly bunched), the MTBPS in thelast week of Octoberand then further ratings updates atend November and start December.
We see growth broadly constant through the year in y-o-y terms after a step-up in Q1 data out inMarch. Inflation should fall from a December peak (and rebase and reweight published) inJanuarythrough to a bottom in June data out inJulyand then a rise back up to the top end of the SARB’s target.
We believe the SARB will be steady but hawkish throughout the year, ready to act on a weaker ZAR, higher inflation expectations or an unanchoring of the long end of the inflation forecast.
Much of the event risk is hard to put on the calendar. For example, the raft of court cases against state institutions and political leadership by opposition parties and the Zuma 783 corruption charge appeals procedure. These narratives will grind on in the background with some regularity.  ﻿

Nomura's 2017 outlook for SA: The risk narrative

South Africa&#8217;s rand touched 2-1/2 month high against the U.S. dollar on Wednesday after a court ordered the release of a report over alleged influence peddling in government by close allies of President Jacob Zuma.
Zuma earlier withdrew a court challenge to the release of the report by the Public Protector, a constitutionally mandated anti-graft watchdog, on the extent of political influence by the Gupta family, who are his wealthy friends.
At 1320 GMT, the rand traded at 13.36000 per dollar, 1.8 percent firmer from its New York close on Tuesday and trading at its firmest level since Aug. 18, according to Thomson Reuters data.
&#8220;It&#8217;s an indication that the country still enjoys institutional strength and that&#8217;s a definite plus for investors,&#8221; ETM Analytics economist Jana van Deventer said.
&#8220;The currency could strengthen further if we see more progress on this front.&#8221;
Government bonds firmed alongside the currency, with the yield for the benchmark instrument due in 2026 dipping 10.5 basis points to 8.655 percent.
On the bourse, the benchmark Top-40 index fell 1.5 percent to 43,787 points while the All-Share index dropped 1.2 percent to 50,338 points.
 
(Reporting by Olivia Kumwenda-Mtambo and Tiisetso Motsoeneng; Editing by James Macharia)﻿
<div></div>

South Africa's rand hits more than 2-month highs on release of Gupta report

South Africa&#8217;s rand weakened against the U.S. dollar in early trade on Tuesday, weighed down by a firm greenback and continued concerns that the finance minister could be facing imminent arrest.
 
(Reporting by Zimasa Mpemnyama; Editing by James Macharia)﻿
<div></div>

South Africa's rand weaker on firm dollar, finmin woes

Kelley Holland
Source: <a href="https://www.cnbc.com/id/49336847">Why the South African Rand May Go Further South</a> 
<img loading="lazy" decoding="async" type="image" src="https://image.cnbcfm.com/api/v1/image/49328560-south-african-miners-protest2-20121005-200.jpg?v=1350440843&amp;w=1910&amp;h=1000" data-licensor-name="" width="1910" alt="Striking mine workers demonstrate outside the Anglo American Mine in Rustenburg. South African." height="1000"></img>
Labor unrest in South Africa is weighing on the rand, and this strategist sees more weakness ahead.
It&#8217;s been a rough time in South Africa lately, with labor unrest roiling the country &#8211; and the currency. 
But if you think it&#8217;s time for the rand to turn around, think again, says Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank. 
I don&#8217;t want to fight the trend,&#8221; she told CNBC&#8217;s Melissa Lee, since so much of the trading in the rand is driven by electronic models. So when the models flip, Bourdeau says, &#8220;you don&#8217;t want to fight that flow because the macro flow in the FX market in terms of rand is much smaller than this e-flow.&#8221; Instead, she says, &#8220;you really have to wait until these models decide to turn around and go long rand and you can jump on the trade.&#8221;
Bourdeau sees more opportunity selling the euro&nbsp;&nbsp;against the Canadian dollar. She is unimpressed by Monday&#8217;s developments at the euro zone finance ministers&#8217; meeting, arguing that investors really just want to see Spain request a bailout. But she likes the latest &#8220;blockbuster&#8221; employment report from Canada. 
Bourdeau wants to sell the euro against the Canadian dollar at 1.2660 with a stop at 1.2810 and a target of 1.2350.
Tune In: CNBC&#8217;s &#8220;Money in Motion Currency Trading&#8221; airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. 
Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class. 
Talk back: Tell us what you want to hear about &#8211; email us at moneyinmotion@cnbc.com.

Why the South African Rand May Go Further South

Kelley Holland
Source: <a href="https://www.cnbc.com/id/46798474">Your Trade for Rising Yields</a> 
<img loading="lazy" decoding="async" type="image" src="https://image.cnbcfm.com/api/v1/image/41492714-man-with-chart-up.jpg?v=1354732729&amp;w=1910&amp;h=1000" data-licensor-name="LWA | Riser | Getty Images" width="1910" alt="" height="1000"></img>
The euro has been trading in a narrow range, and this strategist sees a dollar-trading opportunity when it budges.
Despite the news buffeting currencies, not much has moved the euro-dollar rate. But Willie Williams, director of institutional derivative sales at Societe Generale, thinks that&#8217;s about to change. 
&#8220;I think we can see the euro push lower from here, especially as some of the carry trades in the market come under pressure,&#8221; he says. 
Williams argues that the euro has been supported by decent risk appetite along with fundamental developments like the successful long-term refinancing operation. But for now, he told CNBC, &#8220;I like buying dollar ZAR.&#8221; 
Williams argues that the South African rand is exposed to a slowdown in China, and that the currency has been moving in tandem with copper prices recently. The rand &#8220;is also exposed to higher energy prices, and with oil where it is they&#8217;re going to start coming under more external pressure.&#8221;
So much for South Africa &#8211; but there&#8217;s more. &#8220;As we see U.S. rates continue to rally&#8221; &#8211; which should help the dollar &#8211; &#8220;I think we&#8217;re going to see a further selloff in emerging market rates as well as in emerging market currencies, for the time being,&#8221; Williams says.
He wants to enter the trade at 7.6000 with a stop at 7.4500 and a target of 8.0500.
You can watch the trade on the video.
Tune In: CNBC&#8217;s &#8220;Money in Motion Currency Trading&#8221; airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. 
Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class. 
Talk back: Tell us what you want to hear about &#8211; email us at moneyinmotion@cnbc.com.

ZAR

China and India launch investment spree in Africa ahead of key summit

China and India launch investment spree in Africa ahead of key summit

South Africa’s rand hits 3-yr high against dollar

Market Update: Eventful week sees rand firm and JSE trend lower

South African rand slightly weaker ahead of budget speech

South African rand hovers near 3-yr highs after Zuma quits

South African rand firms on talk Zuma will resign, Gupta arrest

Rand benefits from ongoing acceleration in Dollar selling

South Africa’s rand weaker as ruling party’s succession race gathers steam, stocks firmer

Africa’s economies ranked by GDP, which is really the largest?

South Africa’s rand firm as central bank keeps interest rates on hold

Nomura's 2017 outlook for SA: The risk narrative

South Africa's rand hits more than 2-month highs on release of Gupta report

South Africa's rand weaker on firm dollar, finmin woes

Why the South African Rand May Go Further South

Your Trade for Rising Yields

News Tips

Advertise With Us

ZAR

China and India launch investment spree in Africa ahead of key summit

China and India launch investment spree in Africa ahead of key summit

South Africa’s rand hits 3-yr high against dollar

Market Update: Eventful week sees rand firm and JSE trend lower

South African rand slightly weaker ahead of budget speech

South African rand hovers near 3-yr highs after Zuma quits

South African rand firms on talk Zuma will resign, Gupta arrest

Rand benefits from ongoing acceleration in Dollar selling

South Africa’s rand weaker as ruling party’s succession race gathers steam, stocks firmer

Africa’s economies ranked by GDP, which is really the largest?

South Africa’s rand firm as central bank keeps interest rates on hold

Nomura's 2017 outlook for SA: The risk narrative

South Africa's rand hits more than 2-month highs on release of Gupta report

South Africa's rand weaker on firm dollar, finmin woes

Why the South African Rand May Go Further South

Your Trade for Rising Yields

News Tips

Advertise With Us

Newsletters