STANLIB's Weekly Focus 03 March 2008
EXECUTIVE SUMMARY OF STANLIB’s WEEKLY FOCUS
1) RAND WEAKNESS AND INFLATION KNOCKING BONDS:
* The Rand has fallen to another record low against the Aussie dollar, having fallen from R6 to the dollar at the end of 2007 to the current R7.40 to the dollar.
* The Rand to the Euro has today declined back to its all-time record low last seen in late December 2001 of over R12 to the Euro.
* The Rand weakness and high inflation is placing pressure on the SA bond market, with bond yields rising to their highest in over three years.
* Rising bond yields could place pressure on Property funds, as well as FINDI shares.
2) SNIPPETS OF INFO:
* Vietnam’s economy has grown at an average 7.5% over the past ten years; however inflation is on the rise.
* The CRB spot index of commodities such as crude oil, copper, corn and coffee jumped 12% in February, its biggest monthly rise since July 1974!
* The big seven year down-trend for the dollar has resumed, which is helping the dollar prices of commodities like gold and platinum.
ECONOMIC UPDATE:
* A significant amount of key economic data was released last week, unfortunately with most worse than expected.
* SA GDP grew by 5.3%q/q in Q4 2007, well above expectations. For 2007 as a whole the economy grew by 5.1%.
* Core consumer inflation (CPIX) was higher than expected in January at 8.8%y/y, and is clearly heading over 9% in the short-term and is unlikely to make the target this year.
* Private sector credit rose more than expected in January to 23%y/y. Overall, credit growth remains high, but is expected to slow further in 2008.
* The trade deficit widened substantially to R10.2bn in January. Mainly due to a decline in exports (partly electricity outages) and an increase in oil imports. Horrible combination!
Click here to read the focus (PDF file 230kb)
