STANLIB's Weekly Focus
EXECUTIVE SUMMARY OF STANLIB's WEEKLY FOCUS
1. CHINA AND BCA'S VIEW ON THE WORLD:
* Chinese growth continues with GDP up 11.5%; retail sales up 17%; and industrial production up 18.9%.
* Platinum is at an all time record high today, followed closely by oil and gold.
* BCA's Managing Editor, Chen Zhao, gives his educated thoughts on world markets. He still guesses that the global equity bull market has another year to run before the Chinese stock
* bubble is pricked by rising interest rates.
* Hang Seng Index in Hong Kong is still soaring, and is up another 1000 points today (3.3%). The index is now up 55% in less than 3 months!
* The STANLIB Offshore SE Asia Fund has 9.5% of Hong Kong shares.
2. SA BANKING SHARES SPRING TO LIFE WITH CHINESE DEAL:
* SA banking shares, which have looked cheap for so long, finally sprang to life and have reached new record highs today.
* Chinese Bank (ICBC) earnings are expected to grow by 29% next year, better than 17% forecast for Standard Bank.
* Banks index now up 21.6% from lows in August.
* China needs African Banking and Telecommunications expertise, hence rumours of another Chinese buyout of MTN.
3. COMMODITY CURRENCIES STRONG:
* SA Rand benefiting from ongoing commodity boom, apart from huge Chinese investment in Standard Bank and rumours of possible other investments.
* So far in 2007, the Canadian $ is up 10% against the strong Euro, and is now 4% stronger than the US $!
4. SNIPPETS OF INFO:
* Stock markets globally are to some extent being driven by the expectation of another rate cut by the Fed this Wednesday 31/10.
* So far this year the NASDAQ Index is up 16%,double that of the S&P 500,so tech stocks generally seem set to continue to outperform most financial and industrial shares.
ECONOMICS
* Headline consumer inflation (CPI) at 7.2%y/y as well as CPIX inflation at 6.7%y/y were both higher than consensus and up from their previous levels last month.
* PPI Producer inflation remained unchanged and below consensus at 9.4%y/y.
* SA Credit Growth remained above 20%y/y for the 21st consecutive month in September, but is expected to slow as higher interest rates become more effective.
* All the data is crucial ahead of the final interest rate decision of the year in December. Acknowledging risks to the upside, STANLIB currently anticipates no further rate hikes this year
* Our Chief Economist, Kevin Lings, attended the IMF, World Bank and IIF (Institute of International Finance) annual conference in Washington from 19 to 22 October 2007. take We will look at the main economic discussion points that surfaced.
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