Here is what’s happening in the markets:
- All eyes are on Finance Minister Pravin Gordhan ahead of his budget speech this week. Gordhan is widely believed to be introducing more taxes – particularly on the wealthy who have taken money out of the country – to reduce government’s revenue short fall. This may possibly include tighter foreign exchange controls and a second grace period for those who have taken billions of rands off-shore.
- Sticking with the budget – while getting more revenue is a good plan, economists believe that it won’t get anywhere close to solving the country’s problems. In fact, economists say that the economy is likely to get much worse, considering the hard time the commodity industry is facing, on top of other factors, like the drought. Cutting costs should be Gordhan’s primary goal, they say.
- South African stocks were dragged lower, falling more than 2% on Friday on the news that mobile operator MTN was expecting a 20% drop in full year earnings. The rand was little changed at a seven-week high as firming U.S. inflation rekindled prospects of a Federal Reserve rate hike, a move that could tighten global liquidity. The rand is trading at R15.38 to the dollar, R21.98 to the pound and R17.10 to the euro.
- In global markets, Asian shares edged higher on Monday as investors awaited a rush of February industry surveys to take the pulse of the global economy, while sterling suffered on concerns the UK might yet vote to leave the European Union. Wall Street ended little changed on Friday, with a left in the tech sector offsetting a renewed drop in oil prices.
- Oil prices remain close to $30 a barrel, with international industry ‘veterans’ predicting that the slump is going to stick it out, just like it did in the 1980s. Locally, the Central Energy Fund reported an over-recovery of 65 cents in LRP fuel, continuing the expectation of a fuel price drop in March. Diesel, meanwhile, is showing an under-recovery of 14 cents, pointing to an increase.
In other news: Deputy President Cyril Ramaphosa has spoken out – cryptically – about the role of the Gupta family and the South African state. He acknowledged that there was a perception of businesses being involved in “state capture”, but didn’t go as far as to name the Guptas and their relationship with president Jacob Zuma.