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Repo Rate & Downgrade

Repo rate unchanged at 6.75%.

During the past week, the monetary policy committee of the SA Reserve Bank (SARB) decided to leave the repo rate unchanged at 6.75%. The prime lending rate accordingly stays at 10.25%. This follows the announcement by Statistics SA earlier that consumer price inflation eased to 4.8% for October, down from the 5.1% reported for September 2017. Although the inflation figures look positive, the SARB indicated that it was concerned about the longer-term outlook. 

S&P Global Ratings on Friday evening downgraded South Africa’s long-term local currency rating to ‘BB+’ (or junk), from ‘BBB-’, with a stable outlook, while Moody’s placed the country on review to be downgraded. On Thursday, Fitch affirmed SA’s long-term foreign and local currency debt ratings at ‘BB+’ (commonly referred to as ‘junk’), with a stable outlook. 

Following the announcement, the rand traded weaker after having strengthened earlier in the week on the back of a seemingly peaceful outcome in Zimbabwe. The SA currency traded above R14 to the USD at the time of drafting this newsletter. 

The equity market reached another record closing last week Wednesday, following a strong performance by Naspers. The company’s shares closed at a massive R4 090 per share, which propelled the all-share index to a record-breaking 61 211 points close on Wednesday. Subsequently, both Naspers and the all-share index (ALSI) gave up some of its earlier gains, and the ALSI closed Friday at 60 323.95 points. 

Global equities were modestly higher during the week amid strong global economic momentum. 

Talks between Chancellor Angela Merkel’s Christian Democratic Union and the Free Democratic Party broke down on Sunday evening, plunging Germany into a political crisis. Merkel finds it difficult to convene a government after her party failed to win an outright majority in the last election. 

Back on the home front: With the downgrade behind us, markets will in the coming weeks focus on the ANC’s national elective conference scheduled for 16 to 20 December in Gauteng. 

Johan Steyn


SECURITAS – Wealth Management

Market data provided by I-Net | News article provided by Securitas with 4D Wealth
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Johan Steyn, RFP®, Cell. 082 680 9510,
Fanie Wasserman, B. Com (Hons)(UJ), PDFP (UOVS), CFP®,
Albert van der Linde, B. Com (US), B. Com (Hons)(UP), Cell. 076 087 3084,
Hannes Bresler, CFP®, B. Com (Hons)(UJ), Pr.Tech Eng, Cell. 082 823 7973,
Henro Grové, B. Com (UP), B. Com (Hons)(UP), Cell. 083 945 3578,