A week in perspective

During the past week, local markets were dominated by a stronger currency. The rand gained 1.65% against the USD to trade at around R13.18, from R13.40 a week before.  

During the past week, local markets were dominated by a stronger currency. The rand gained 1.65% against the USD to trade at around R13.18, from R13.40 a week before. The currency also strengthened by 2.21% against the euro and by 1.93% against the pound. The main reason for the stronger currency was the commitment made by the Chinese government to invest $14.7 billion in the SA economy, and Eskom’s signing of a $33.4 billion government-backed loan with the China Development Bank for the construction of the Kusile power station. On top of these commitments, non-residents were net buyers of the country’s government debt for the second week running, as emerging-market sentiment improved and inflation in South Africa fell short of analysts’ estimates. The positive news supported the currency and strengthened local bond and equity markets.

The equity market gained 0.34% in total. The resources sector gained 3.04% on the back of higher international commodity prices despite the stronger currency. The financial sector closed 2.14% higher supported by a stronger rand and improved bond yields, while the industrial sector closed 1.17% lower, pushed down by rand-hedged shares.

The yield on the RSA 186 10-year government bond dropped from 8.71% to 8.57%, which is an indication of buying pressure from international investors and a stronger currency.

In the US, economic growth accelerated in the second quarter, with the gross domestic product expanding at a 4.1% annualised rate – the fastest pace in nearly four years. Improved consumer spending and business investment, along with increased government spending, helped boost growth.

US president Donald Trump and European Commission president Jean-Claude Juncker met at the White House on Wednesday where they unexpectedly agreed on a framework that will keep the two sides from escalating the ongoing trade battle.

Although the looming trade war between the US and China was the main discussion point at the Brics summit held in Sandton last week, the various parties also focused on the 4th industrial revolution and how to get the member states ready for the impact of automatisation in the future.

 

Regards,
Securitas Wealth Management























Securitas Financial Group is a Registered Financial Services Provider (FSP) FSB license number 6536

Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za;  

Albert van der Linde, B.Com (US), B.Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za;

Hannes Bresler, CFP®, B.Com (Hons)(UJ), Pr.Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za;