Central banks prepare for 2008-style Covid-19 hit; Eskom punishes manufacturers; PIC Ayo scalp

By Jackie Cameron

  • Sentiment in South Africa’s manufacturing industry fell to the lowest level in more than a decade in February as the prospect of continued power cuts and concern about the global economy weighed on confidence, reports Bloomberg. That makes the recovery of an economy that the government estimates expanded at the slowest pace in 10 years in 2019 even more challenging, says the news service. Absa’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, dropped to 44.3 from 45.2 in January – the lowest level since August 2009.
  • The Public Investment Corporation (PIC) has terminated the employment contract of its Executive Head of Listed Investments, Fidelis Madavo, it announced. The axing is in connection with a R4.3bn investment in Ayo Technology Solutions, which has allegedly diverted money to the troubled Independent newspaper group. Madavo was suspended in connection with contravening  governance and approval processes at the PIC. He was fired on grounds of gross misconduct. The offices of Ayo Technology have been raided by the Financial Sector Conduct Authority.
  • Global central bankers pledged action aimed at stabilising markets rattled by the outbreak as pressure builds on them to ease monetary policy to safeguard their economies and appear set to move in tandem for the first time since the 2008 financial crisis. The impact of Covid-19 on the global economy will “likely be substantial,” World Trade Organisation Director-General Roberto Azevedo warned on Monday. The effects will start to show up in the trade data in the coming weeks, he is reported as saying.
  • Goldman Sachs economists told Bloomberg that central banks may deliver the reductions in tandem for the first time since 2008. Stocks rallied and Europe’s debt risk fell the most since September, reports Bloomberg. Goldman Sachs predicted the Federal Reserve will cut rates by half a point and money markets are anticipating a 25 basis-point reduction from the Bank of England this month. “The Bank of Japan said in an emergency statement that it would strive to provide ample liquidity and the Bank of England followed up with a pledge to ensure all necessary steps are taken to protect stability. The commitments came after Federal Reserve Chairman Jerome Powell opened the door to cutting interest rates in the US,” says Bloomberg.
  • In a sign of how global panic about the highly contagious virus has spread, the Louvre museum in Paris remained closed on Monday as staff declined to turn up because of worries over the coronavirus outbreak. Employees at the world’s most-visited museum stopped work on Sunday under rules designed to protect against serious health risks, says Bloomberg.
  • Businesses are re-thinking their work arrangements. For example, Credit Suisse Group AG is considering splitting teams in Switzerland into different offices to ensure business can continue, which would be an extension of what has already been rolled out in Asia, says Bloomberg. The bank is also weighing whether to ask employees in the country to work remotely.
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