Category Investments

A bit of this and that

17 July 2006 Angelo Coppola

While the rand lost ground towards the end of the week as violence in the Middle East put renewed pressure on emerging market currencies, the Nedcor Economic Unit says the local unit closed weaker at R7,20 and R13,17 against the US dollar and the British

However, it closed unchanged at R9,13 against the euro from a week earlier. The local bond market firmed slightly.

The yields on the R1942008, R1532010 and R1572015 eased to 8,44%, 8,47% and 8,56% respectively on Friday compared with 8,47%, 8,50% and 8,60% in the previous week.

On the international front however, Economic pundits the world over will join the Fed in watching the US economy closely over the coming months to see if it slows just enough to remove pressure for an eighteenth successive interest rate hike, but not too much to cloud any interest rate relief with rising investor concerns for US corporate profits.

This is according to Peter Lucas, global investment strategist for investment house, Ashburton.

He says that despite the growing shift in global economic attention to the East, this trend is still in its infancy and the US remains the single most influential factor on the global economic stage.

Lucas believes US interest rates may have plateaued at 5.25% and that the Fed may feel bold enough to hold them at that level, to allow more time for them to impact on US inflation.

Mays broad-based market correction clearly reflected flight to quality investor sentiment, as they even abandoned riskier high fliers like India in favour of equities in the developed world.

This was not surprising, but the extent to which they abandoned the Japanese equity market was. We believe the fundamentals of the new Japanese economic scenario do not support this and that the Nikkeis quarter end recovery will continue in the coming months, says Lucas.

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