The South African delegation to the World Economic Forum (WEF) in Davos, Switzerland, returned home on Friday with a “bag full of investment commitments”, Deputy President Cyril Ramaphosa said. It seems that the international investment community is eager to invest in a post-Zuma South Africa.

The South African currency traded below R12 per dollar on Wednesday for the first time since May 2015, extending a rally sparked by an improving domestic political environment and supported by global risk-on sentiment, and a weaker US dollar.

According to data from Statistics South Africa released last week, the average annual consumer price inflation was 5.3% in 2017. This was 1.1 percentage points lower than the corresponding average of 6.4% in 2016. Inflation for December was 4.7%, up from the 4.6% reported in November. Although this is a month-on-month increase of 0.5%, the figure is still well within the government’s 3% to 6% target band. With the stronger rand and improved macro-economic environment, it is expected that inflation will remain low for the year.

South African markets closed in the green last week, boosted by gains in financial and industrial counters. The financial index returned 4.37%, while the industrial index returned 0.57%. Resources took a breather from its recent rally and closed 1.45% lower. The all-share index (ALSI) closed at 61 595.86, which is 1.14% higher for the week and remains in record territory.

Global equities hit fresh highs this week. Investors took in their stride a brief US federal government shutdown amid strong purchasing managers’ indices, which signal continued synchronised global economic growth. The US economy grew at an annual rate of 2.6% in the fourth quarter of 2017, below the 2.9% consensus forecast.

In the US, the S&P was up 2.23% for the week, while the Shanghai Composite closed 2.01% stronger. Markets in Europe took a breather, following comments by European Central Bank president Mario Draghi that the stronger euro will impede progress toward the central bank’s inflation goal.

The oil price continued its recovery to trade above $70 a barrel.

According to media reports, this week could see the arrest on corruption charges of members of a prominent family. Everyone is waiting in anticipation for news in this regard.

Johan Steyn

Regards,

SECURITAS – Wealth Management