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Bond sales to foreigners drop
November 16, 2009--Foreigners were net buyers of R2.961bn worth of South African bonds, including repurchase agreements, in the week ended November 13, after net purchases of R3.121bn worth of local bonds the week before, figures from the Bond Exchange of South Africa show.
This brought net sales, including repurchase agreements for the year to date, to R7.977bn.
In 2008 foreigners were net sellers of R40.729bn worth of South African bonds, including repurchase transactions.
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Source: Fin24
Rand firm ahead of weekend
October 13, 2009--The rand remained firm ahead of the weekend with the dollar still under some pressure amid an improvement in global risk appetite.
At 16:00 the rand was bid at 7.4308 to the dollar from 7.4564 at its previous close. It was bid at 11.0543 to the euro from its previous close of 11.0703 and was at 12.4050 against sterling from 12.3720.
The euro was bid at $1.4873 from $1.4845 overnight.
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Source: FIN24
Gold drives firmer rand
November 9, 2009--A firmer rand tracked record gold prices and a weaker greenback in the afternoon session on Monday.
At 15:52 the rand was bid at 7.4179 to the dollar from 7.5052 at its previous close. It was bid at 11.1250 to the euro from its previous close of 11.1693 and was at 12.4355 against sterling from 12.5018. The euro was bid at $1.4986 from $1.4873 overnight.
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Source: Fin24
Africa to Receive $1.1 billion in New Financing for Climate Action
November 6, 2009--African efforts to invest in clean energy and prepare for the devastating consequences of climate change have received a boost with six countries set to receive $1.1 billion in new financing for climate action. From solar water heaters to wind power development and development policy planning, a range of new, scalable investments were given the green light at Trustee meetings of the Climate Investment Funds (CIF) in Washington
Mozambique, Niger and Zambia will each receive up to $50-70 million in additional resources to help transform their economies through climate resilience. While, Morocco and South Africa will join Egypt in receiving very low-interest loans for $150 million, $500 million, and $300 million respectively, to strengthen their investments in clean energy in support of national priorities for low carbon development.
“The CIF support for Africa is coming at a critical time. Climate change has the potential to turn back the clock on hard won development gains across the continent,” said Katherine Sierra, Vice President of Sustainable Development at the World Bank. “CIF financing is teaching us how to work together with governments, civil society and the private sector to make truly transformational investments a reality. Each CIF dollar so far is leveraging an additional ten dollars in private and public investments,”she said.
The Climate Investment Funds are a unique pair of financing instruments designed to test what can be achieved to initiate transformational change towards low-carbon and climate-resilient development through scaled-up financing channeled through the Multilateral Development Banks. The two funds are the Clean Technology Fund (CTF), financing scaled up demonstration, deployment and transfer of low-carbon technologies for significant greenhouse gas reductions within country investment plans; and the Strategic Climate Fund (SCF), financing targeted programs in developing countries to pilot new climate or sectoral approaches with scaling-up potential.
In Africa, where access to energy is critical for economic growth and, therefore, poverty alleviation, the challenge is to help countries obtain the energy they need, without aggravating climate change.
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Source: World Bank
JSE ends flat on US data
November 6, 2009--The JSE ended flat on Friday, up 36 points, having edged into the red in late afternoon trade pressured by US unemployment data, which rose more than expected.
At 17:00 the JSE all share index was flat, up 0.14%, with resources collecting 0.85%, gold miners firming 2.80% and platinum producers edging up 0.18%.
Banks were down 2.32% and financials lost 1.33%, but industrials inched 0.10% higher.
The rand was bid at 7.50 to the dollar from 7.60 when the JSE closed on Thursday. Gold was quoted at $1 096.60 a troy ounce from $1 090.15 at the JSE's last close, and platinum was at $1 352/oz, from $1 351.50/oz at its previous close.
Source: Fin24.com
Bonds eye rand, Eskom
November 6, 2009- South African bonds were in the black by the late afternoon on Friday, but the rally seen in early trade had died down to a whimper.
The strong rand remains key, but a number of concerns - now including the ongoing debacle at Eskom - are weighing on sentiment.
By 16:04, the short-term government R154 bond was bid at 7.045% from a previous close of 7.040%. The medium-term R157 was at 8.305% from 8.350%, while the long-term R186 was at 8.900% from 8.955%.
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Source: Fin24.com
Johannesburg Stock Exchange signs up for responsible investment
November 3, 2009--The JSE has become one of the first stock exchanges worldwide to become a signatory to the United Nations Principles of Responsible Investment (UN PRI), an initiative which aims to help the global financial services industry towards responsible investment.
The exchange sees the moves as a step forward in its already strong support of corporate and investor decision-making which includes environmental, social and corporate governance factors as well as traditional business issues.
It has for several years worked on ways to prompt businesses and business analysts to increase their focus on environmental, social and governance factors.
"Our listing requirements include elements of the King Code of Corporate Governance, for example. Signing the UN PRI further demonstrates our commitment. It also highlights our role as a pioneer in the sustainability field globally, particularly and amongst stock exchanges," explained JSE deputy CEO Nicky Newton-King in a statement this week.
"We believe that stock exchanges have a role to play in stimulating debate between listed entities and investors about these issues."
Socially responsible investment index
The JSE has contributed to the cause of responsible investment through developing the Socially Responsible Investment Index (SRI Index), which was launched in 2004 as the first of its kind in an emerging economy.
An index whose constituents are companies who attain required levels in an annual review of their policies, practices and reporting, it is becoming a widely accepted gauge for good corporate citizenship for listed entities.
"Responsible investing is coming of age in South Africa as evidenced the burgeoning support and growing numbers of signatories to the UN PRI," said Newton-King. "In South Africa, there are currently 25 signatories to the principles, a significant number considering the size of our financial sector compared to other developed countries."
Signatories include large asset owners such as the Government Employees Pension Fund and recent signatory Eskom Pension & Provident Fund.
Guide for investment professionals
Founded in 2005, the UN PRI is a set of principles developed to guide investment professionals to consider environmental, social and corporate government issues in the selection of investment opportunities and to align investors with broader societal objectives.
In South Africa, apart from greater adoption of the UN PRI, there are other factors raising awareness of responsible investing.
"In South Africa, no business can operate divorced from our past. In this respect, issues of sustainability and social responsibility are entrenched and companies have had to address labour, affirmative action and health related issues with much more urgency and vigour than elsewhere," said Newton-King.
"To add to this, there is no fund manager who can deny the existence of great inequality in South Africa and we don’t needs to educate people about the importance of socially responsible investment as much as may be needed in more developed countries."
Source: www.southafrica.info
Gold, Platinum And Crude Oil Commodities Debut On The JSE
October 12, 2009--In a week in which weak dollar and inflation fears in the US continued to fuel demand for metals, and gold reached record prices, local investors interested in taking advantage of the price movements of these metals, began trading rand-denominated gold, platinum and sweet crude oil futures contracts for the first time on the JSE’s commodities derivatives market. This marks a new focus for the JSE. Until now, only agricultural commodities have been offered by the exchange.
“We are confident that trading will gain traction as more and more investors realise that they can trade these highly traded commodities in an easy and more affordable manner,” comments Rod Gravelet-Blondin, Head of the Commodities Division at the JSE.
Until now, investors would have had to trade these commodities on international markets using their foreign exchange allowance and would have been subject to exchange control regulations. Now individuals and corporates have no limits in terms of trading these three commodities on the JSE. This makes it easier for these investors to take advantage of the current interest in these resources as alternative hedging or diversification instruments. Pension funds and long-term insurance companies are however, subject to their 20% foreign allocation limits and asset managers and registered collective investment schemes are subject to their 30% foreign allocation limits when trading these commodities.
In terms of a recent agreement signed with the world’s largest derivatives marketplace, CME Group, the locally listed contracts will be cash-settled using benchmark gold settlement prices referenced from CME’s COMEX division and platinum and crude oil prices from its NYMEX division. Given that the underlying instrument is a contract traded on the Nymex or Comex, investors have the added advantage of accessing highly liquid international markets via these rand-denominated contracts.”
“The two metal commodities should interest local investors as South Africa is the world’s largest platinum producer and the third largest gold producer. The price of the commodities is generally linked to the prices of mining stocks. The liquidity that the current market makers and any new ones will bring to the market can only be beneficial to investors,” says Ashley Erasmus, Senior Commodities Trader at Nedbank Capital. Standard Bank and Rand Merchant Bank will also be quoting live rand prices for investors.
To make these contracts more attractive to individual investors, the JSE has made the contracts based on smaller lot sizes than those traded on the US markets. “We have taken accessibility into account, for instance the minimum contract size for crude oil on our market is 100 US barrels (15 898.73l) with contracts expiring in Feb, June, August and December, while in New York the contract minimum is 1000 barrels,” explains Gravelet-Blondin.
For both gold and platinum, each contract size equates to 10 troy ounces with the minimum price movement set at 100 South African cents per ounce. The gold contract expiry months are April, June, August and December with a minimum of two expiries always available for trade. The contract for platinum expires in January, April, July and October with a minimum of two expiries always available for trade.
“We are particularly excited about the opportunities that a crude oil contract offers. Oil has a knock-on effect on all sectors of the economy. Notably, as diesel is a major cost in farming, this will give our agricultural market a tool to hedge a major input cost. Organisations in the transport and manufacturing sectors that use large quantities of fuel may also want to hedge their energy usage against the benchmark,” adds Gravelet-Blondin.
In June 2008, the South African Reserve Bank granted the JSE approval to trade future and option contracts on Foreign Referenced Commodities, subject to certain conditions. In February this year, the JSE listed a Chicago corn contract and anticipates listing additional cash- settled commodities in the coming year.
Source: Online News
Kenyan Companies Turn to Bonds for Cheaper Funds, Kestrel Says
October 7, 2009--The largest companies in Kenya, East Africa’s biggest economy, are opting to raise funds for expansion through bond sales as the cost of borrowing from traditional lenders becomes more expensive, Kestrel Capital East Africa Ltd. said.
Safaricom Ltd., Kenya’s biggest mobile-phone company, today became the second company in a month to begin selling bonds, after Kenya Electricity Generating Co., the biggest power producer in the country, closed a 25 billion-shilling ($332.5- million) bond sale on Sept. 29.
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Source: Bloomberg
Exploring U.S. Policy Options during Zimbabwe's Transition
Acting Assistant Secretary Baukol Before the Senate Foreign Relations Committee
September 30, 2009--Chairman Feingold, Senator Isakson, and distinguished members of the Committee, thank you for inviting me to testify at this important hearing on the current situation in Zimbabwe. Thank you also for asking my colleagues from the Department of State and USAID to join me at the witness table. I think we all agree that Zimbabwe's economy has taken a turn for the better over the last seven months and that progress could be fleeting if it is not supported by a political solution that restores democracy, rule of law, and strong institutions.
People who follow Zimbabwe closely are probably familiar with the recent economic trends, but it is worth recapping the economic mismanagement that devastated the country and contributed to the profound fragility of the current situation. When Robert Mugabe took office as leader of Zimbabwe after a long civil war, Zimbabwe had all the ingredients necessary for prosperity. With a per capita GDP of around $1,400[1], Zimbabwe was blessed with ample mineral resources, decent infrastructure, and productive farms that made it a breadbasket to Southern Africa. In 1980, Tanzania's then-President Nyerere told Mugabe he had inherited the "jewel of Africa." For almost two decades, Mugabe's government managed to maintain economic growth and roughly stable per capita GDP, but beginning in the late 1990s, the wheels began to come off. Thanks to a set of disastrous economic policies, headlined by a chaotic land redistribution scheme, five decades of economic progress were erased in five years, with per capita GDP in 2005 roughly equaling that in 1953, according to an analysis by the Center for Global Development. The combination of undermining the rule of law, instituting oppressive economic decrees, and suppressing press freedoms and political opposition led one observer in 2003 to describe Zimbabwe as a case study in "How to Kill a Country."[2]
The economic crisis further deepened as bad policies and the government's paranoid reaction to international isolation due to gross violations of human rights fed the spiral of decline.
The government revalued the currency in 2006 but quickly began resorting to the printing press to paper over yawning budget deficits. Inflation hit 90 sextillion percent in November 2008.
Despite its former status as a breadbasket for the region – one that sourced UN-sponsored food aid to other countries in Africa[3] – Zimbabwe's agricultural output declined to the point that about half of the population was in need of food aid in 2008.
Neglect of the medical sector and water infrastructure helped lead to a cholera outbreak that killed 4,276, according to the WHO.[4]
An estimated one-fourth of the population left conditions in Zimbabwe over the last decade; most went to South Africa in search of jobs to support their families.
The country's reserves plummeted to $5.8 million by the end of 2008, according to the IMF,[5] despite the country's possession of mineral resources such as chromite, coal, platinum, asbestos, copper, nickel, gold, and iron ore.
Economic activity and GDP plummeted, with the IMF estimating that per capita GDP fell to $188 on a PPP basis in 2008.
In this context, the last seven months have been characterized by relative economic stability as reformist elements of the transitional government began to undo some of the more disastrous economic policies of the previous nine years.
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Source: U.S. Department of the Treasury