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IMF urges SA to delay rates rise
August 25, 2011-South Africa’s economy will likely grow by 4% this year and next but faces significant downside risks from a slowdown in the developed world, the International Monetary Fund (IMF) said on Thursday.
In its Article IV report, the IMF said strong local demand will underpin growth in the economy, but given the uncertainties globally and locally, it would be prudent to delay interest rate increases.
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Source: FIN24
Tunis Stock Exchange seeks to support growth
August 25, 2011-Tunisia’s stock exchange, the Bourse des Valeurs Mobilières de Tunis, aims to play its role in faster economic growth in coming years. On 9 July, Mr. Mohamed fadhel Abdelkefi, President of the BVMT’s management committee, announced a 5-point development strategy for 2011-2013. This will include:
1. Develop the financial market culture and awareness through media and education outreach campaigns and open days
2. Deepen the capital market by making more companies eligible to list
3. Further develop the bond market including possibly a secondary mortgage market
4. Improve the IT platforms, including a new electronic trading and
information platform in 2012
5. Develop BVMT staff and human resources through additional training programmes.
There are 58 companies listed for trading. According to CEO Mohamed Bichiou foreign participation makes up about 20% of the market capitalization, which was TND 13.2 billion ($9.6bn) on 30 June. At its 2011 peak on 7 January the TUNINDEX was at 5,217.41, before crashing 23% to a low of 4,033.43 on 25 February after the stock exchange closed during the revolution. It then gained, slipped back to 4,077.05 on 26 May but has since been climbing well and closed at 4,476.94 on 24 August, up 9.8% in 3 months. The construction and building materials index has been the best performing followed by industrial and basic materials companies, while banks have been the worse performing (many investors expected them to take hits on loans to people linked to the former regime of President Ben Ali), followed by insurers.
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Source: African Capital Markets
JSE follows Asian markets softer
August 24, 2011--The JSE opened fairly flat on Wednesday morning, but weakened in the first hour of trade as Asian markets were negatively impacted by a Japanese downgrade.
By 10:05 local time, the JSE All Share [JSE:J203] index was off 0.22%, despite a 0.18% rise in resources. Gold miners were off 1.5% and platinum miners edged 0.29% softer.
Industrials declined 0.49%, financials shed 0.29% and banks gave up 0.41%.
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Source: FIN24
Rand still vulnerable against dollar
August 24, 2011--The rand weakened against the dollar on Wednesday and is likely to remain under pressure given the uncertainty prevailing in global markets.
Government bonds firmed and focus will be on CPI inflation data at 08:00 GMT. The market is expecting inflation to rise to 5.2% year-on-year.
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Source: FIN24
JSE closes weaker led by gold shares
August 23, 2011-- JSE stocks ended decidedly weaker on Tuesday, underperforming main global equity markers on the day, as gold miners led the downside.
The JSE briefly halted trading in the afternoon session as it lost connectivity on its international links to the trading system at the London Stock Exchange.
By 17:00 local time, the JSE All Share [JSE:J203] index finished 0.59% down to 29 259.86 points, led by a 2.32% slide in gold shares and a 1.30% dip in resource stocks.
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Source: FIN24
Rand holds steady against dollar
August 23, 2011--The rand held steady against the dollar in early trade on Tuesday and dealers were expecting a stalemate between bulls and bears for the rest of the week, while government bonds took a break from a sharp rally in the previous session.
The rand, which has tracked turmoil in global markets, is seen settling slightly this week as knee-jerk reactions subside and dealers wait for more clues on the global growth picture.
By 06:17 GMT the rand was at R7.1945, mostly steady against the dollar and off a close of R7.2025 in New York.
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Source: FIN24
The Cyclicality of Fiscal Policies in the CEMAC Region-IMF Working Paper
August 23, 2011--Summary: This paper examines fiscal cyclicality in the CEMAC region during 1980-2008. The issue has attracted very little empirical interest but is important if fiscal policies are to play a role in mitigating external shocks that exacerbate economic cycles across the region.
We assess whether fiscal policies across these six countries have been procyclical using panel data to elaborate our analysis. Like in other sub-Saharan countries, total public expenditure in the CEMAC is found to be strongly procyclical. This is most pronounced for public investment, which overreacts to output growth with elasticity above 1. We further find that institutional weaknesses and poor governance partly explain this behavior. In contrast, the existence of an IMF-supported program can be a counterbalancing influence in attenuating this bias.
view the IMF Working paper-The Cyclicality of Fiscal Policies in the CEMAC Region
Source: IMF
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
