Newsletter – 29th May 2017

Nuusbrief – 22de Mei 2017
May 23, 2017
Nuusbrief – 29de Mei 2017
May 29, 2017
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Newsletter – 29th May 2017

Good day,

Inflation in April came down to 5,3%, from 6,1% as reported in March. This is according to data released by Statistics South Africa on Wednesday and is the lowest inflation rate recorded since December 2015.

Food and non-alcoholic beverages decreased from 1,5 percentage points in March to 1,1 percentage points in April. Similarly, transport decreased from 1,1 percentage points in March to 0,7 percentage points in April.

The rand dipped below R13 to the US dollar on positive consumer inflation data and rumours that the ANC leadership will discuss the removal of President Jacob Zuma at its weekend National Executive Committee meeting.

South Africa’s central bank kept its benchmark repo rate steady at 7% on Thursday, as expected, citing concerns about the inflation outlook, even though it cut its growth forecasts. The Bank has revised GDP growth downwards for both 2017 and 2018 by 0,.2%to 1,0% and 1,5% respectively. The forecast for 2019 is 0,3% lower at 1,7%.

The JSE reacted negatively in line with global emerging markets to the news of Moody's downgrade of China's credit ratings on Wednesday for the first time in nearly 30 years. It expects the financial strength of the economy to erode in coming years as growth slows and debt continues to rise.

This news, which came as a shock to financial markets, hurt emerging markets worldwide and the JSE was no exception. This, with the strengthening of the rand, hurt the market and the All Shares closed 0.80% lower for the week. A stronger rand is normally bad news for the dual-listed shares, which earn most of their income abroad in other currencies.

In the developed world equities continued to rally this past week, led by the United States, where record highs were recorded in equity markets. Upbeat corporate earnings and positive economic data helped to underpin a continued rally in US equities, with both the S&P 500 Index and the Nasdaq Composite Index hitting fresh all-time highs on Thursday.

Regards.
Eric Streso

Eric Streso

Markets can remain irrational longer than you can remain solvent.

John Maynard Keynes

Inflation in April came down to 5,3%, from 6,1% as reported in March. This is according to data released by Statistics South Africa on Wednesday and is the lowest inflation rate recorded since December 2015.

Eric Streso
Eric Streso
Eric Streso holds 2 Law degrees, an international MBA in Financial Services, and is a Certified Financial Planner through the FPI. He has more than 20 years of experience in all aspects of financial planning. Eric is a passionate teacher; he lectures at a local Business School which certifies and qualifies financial service practitioners. He has held Senior Executive positions at Sanlam, PWC and mCubed.

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