|Greetings Captains of Industry
I trust the team is strong and continuing to take ground in the South African market!
Well, the turn of 2009 has brought with it mixed economic results. I thought I would take the liberty on behalf of GENUITY FINANCE to touch on some of the economic highs and lows for your interest in this first modest edition of our “MONTHLY MARKET VIEW”:
|(Banks prime lending rates) are down to 14% from a high of 15.5% last year (Nov 2008) with the consensus being a 100-150basis point cut on Monday/Tuesday next week and monetary policy committee meetings to convene monthly from here on out.|
|(now CPI) is down to 8.1% as at Jan 2009 from a high of 13.6% last year (Aug 2008).|
|EQUITY & BONDS|
|Johannesburg Stock Exchange (JSE) all share index has rallied somewhat and today is up to 20,154 from a low of 17,814 last year.South African Bond Market 10yr yield is down and 15yr yield holding its own this year with pricing/values improving|
|Rand/Dollar exchange rate is at R9.62 today down from R9.30 (1st Jan 2009), Rand/Pound exchange rate is at R13.79 today down from R13.45 (1st Jan 2009).|
|GDP contracted 1.8% in the 4th quarter of 2008 (1st time in a decade) with manufacturing & mining sectors specifically under pressure.|
|Retrenchments continue to threaten unemployment rates and the latest economic surveys by Adcorp show that they are affecting 16% of SA firms.|
|CREDIT & MONEY SUPPLY|
|Credit availability continues to be tighter than it has been in perhaps the past century although global GOVT re-capitalisation programs & improved inter-bank lending (LIBOR rate) should stimulate liquidity, with the rate of repossessions being down this month according to local debt counselling agencies. Trevor Manuel, SA’s minister of Finance, even went on record in his budget speech and I quote verbatim that “Credit extension in SA has slowed, probably more rapidly than is desirable. We expect our Banks to continue to extend credit to worthy customers, noting that it is precisely the rapid withdrawal of credit that has plunged much of the developed world into crises.”
Liquidity pressure continues to be high in the marketplace.
|Emerging market investment appetite is still low (Moody’s threatening to lower SA’s A2 rating) with Economic confidence locally down to a 10year low (BER/RMB index at 27 for Q1 2009).
But then again, the glass is half fullJ Looking forward at the prospects for 2009/10: there’s no doubt work to do, but with inflation and interest rates declining; potential for political and social improvement going into our elections; significant infrastructure & economic investment feeding job creation; world cup 2010; SA being the gateway to one billion African consumers (34% GDP of the continent) and a growing democracy (progressive constitution/bill of rights, free press & independent judiciary) …maybe South Africa can be the rainbow nation and maybe it is alive with possibilities.
We look forward to developing business with you and your team based on trust and accountability.