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South Africa: The Cyclical Behavior of the Markups and its Implications for Monetary Policy-IMF Working paper
August 23, 2011--Summary: The study looks at the cyclical behavior of the markups and assesses its impact on inflation dynamics. The analysis finds that the aggregate level of the private sector’s markup is relatively high, thus pointing to the lack of strong competition in South Africa’s product markets.
Additionally, the results suggest that the markups tend to move in a countercyclical manner, with a short-term positive impact on inflation. This implies that the countercyclical pattern of the markups is one factor among others that contribute to the relatively weak output gap-inflation co-movement. In the context of South Africa’s inflation targeting framework, the counter-cyclical markups may also generate an asymmetric response of monetary policy to the fluctuations in economic activity.
JSE recovers in volatile trade
August 22, 2011--JSE stocks ended a little higher on Monday, tracking the positive sentiment on the main global markets.
The local exchange had opened the session lower before drifting into positive territory by midday. In the meantime, the spot price of gold continued to shine.
By 17:00 local time, the JSE All Share [JSE:J203] index finished 0.19% up to 29 433.12 points, led by a 3.16% surge in gold shares and a 0.95% jump in platinum stocks.
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Source: FIN24
Bonds rally as double-dip fears mount
August 22, 2011--South African bonds were firmer in midday play on Monday, which a trader said was on the back of growing fears of a double dip recession which have led market participants to change their views on interest rates.
By 11:50, the benchmark R157 bond was trading at 6.460% from 6.630% at the previous close. The R207 was bid at 7.475% and offered at 7.475% from 7.610% and the R186 was trading at 7.760% from 7.890%
The rand was bid at R7.2039 against the dollar from its previous close of R7.1870.
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Source: FIN24
JSE cuts losses to finish higher
August 19, 2011--The JSE rebounded from more than 500-point losses to finish the session positive on Friday, with banking stocks leading the upside.
By 17:00 local time, the JSE All Share [JSE:J203] index gained 0.31% to 29 378.69, led by a 2.03% jump in banks and a 0.96% rally in financials.
However, gold miners declined 0.66%, resources gave up 0.54% and platinum shed 0.97%, while industrials gained 0.83%.
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Source: FIN24
Gold soars as market mayhem deepens
August 19, 2011--An ugly sell-off in global stocks gathered pace on Friday, on mounting concerns the US economy is heading into another recession and as some European lenders faced a short-term funding crunch, highlighting the risk of a banking crisis.
Nervous investors fled to the safety of core government bonds, Swiss francs and gold, which hit a record high, with many seeking to unwind holdings of riskier assets such as stocks, commodities and higher-yielding currencies before the weekend.
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Source: FIN24
Bonds mostly weaker in late trade
August 19, 2011--South African bonds were mostly weaker in late afternoon trade on Friday, which a trader attributed to some profit taking after an "incredibly" busy week. The R207 was a touch firmer.
Continued interest in the local bonds by foreigners bolstered the market this week as global debt pressures mounted.
By 15:50, the benchmark R157 bond was trading at 6.690% from 6.660% at the previous close. The R207 was bid at 7.650% and offered at 7.665% from 7.665% and the R186 was trading at 7.900% from 7.940%
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Source: FIN24
Bonds maintain positive performance
August 18, 2011--South African bonds were raised slightly in afternoon trade with offshore accounts still buying locally.
Bonds have had a strong run on the back of global jitters that have fuelled significant foreign buying interest of local bonds.
By 15:21, the benchmark R157 bond was trading at 6.725% from 6.790% at the previous close. The R207 was bid at 7.745% and offered at 7.725% from 7.805% and the R186 was trading at 8.020% from 8.100%
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Source: FIN24
Risk aversion again hammers rand
August 18, 2011--The rand extended losses against the dollar on Thursday, falling more than 2.1% and in tandem with local and global stocks, which were slammed by renewed world growth worries.
Government bonds strengthened and the yield on the 4-year issue hit a new all-time low of 6.67% as foreign investors snapped up local debt, which still offers better returns than those in developed countries.
The rand traded at R7.2285/$ in afternoon trade, after earlier hitting a session low of R7.2505/$ Wednesday’s close at R7.0927/$. The rand ranked in the bottom five in a basket of 20 emerging market currencies monitored by Reuters.
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Source: FIN24
JSE books biggest drop in 15 months
August 18, 2011-- JSE benchmark stocks booked their biggest daily decline in more than 15 months on Thursday, tracking equities elsewhere which slid on renewed worries about the global economic recovery.
The JSE Top-40 blue-chip index ended 3.37% lower at 26 030.31, registering its biggest daily decline since early May 2010. The broader All Share [JSE:J203] index dropped 2.956% to 29 288.86.
Renewed worries about Europe's debt crisis and a raft of weak US economic data hit global markets, driving down stocks and oil prices and pushing US bond yields to record lows while pushing gold to a record high.
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Source: FIN24
Nigeria taking lead in local debt
August 18, 2011--Nigeria looks set to overtake South Africa as the continent’s biggest issuer of local government debt with a planned $650m auction by one of its states in October, but sub-national bonds remain far off for much of Africa.
Capital markets can prove cheaper than bank loans - and may be the only option - for some governments seeking to fill budget gaps or fund big infrastructure projects, but in much of Africa the growth of local debt issuance has been slow to take off.
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Source: FIN24
