By Linda van Tilburg
- South Africa’s weak economic growth is due to unsustainable policies and monetary policy alone can’t fix that, Reserve Bank governor Lesetja Kganyago said at a public lecture in Bloemfontein. The governor was responding after data indicated that South Africa has slumped into recession and calls for him to cut interest rates after a surprise US Federal rate cut prompted by the coronavirus. He said the supply-side of the economy was in deep trouble and these growth constraints was beyond the reach of monetary policy. “If South African inflation were to moderate further, the SARB would have more space to lower interest rates,” Kganyago said. “But even with extremely low growth, inflation does not appear to be slowing further” and he saw almost no risk of inflation missing the target from below, which had been a problem for many other countries.” The MPC is scheduled to announce its next rate decision on March 19.
- The government is not considering a travel ban because of the outbreak of the coronavirus. Health Minister Zweli Mkhize said during a health portfolio committee meeting in Parliament that it wasn’t planning to cancel any international events and ports of entry to the country would be kept open. Mkhize said he did not see the need for these measures as South Africa did not have any confirmed cases of coronavirus and the government will observe and monitor how the situation pans out. 13 hospitals have been chosen to isolate and treat any possible cases. Mkhize added that none of the South Africans who were going to be repatriated from the Wuhan province in China on an undisclosed date have exhibited any symptoms of the virus. The World Health Organisation said 3.4% of confirmed cases of COVID-19 had died. The WHO also said they were monitoring the situation with Japan and has decided it is too early to think of postponing the Olympics in Tokyo in July.
- Public Enterprises Minister, Pravin Gordhan, has expressed the hope that some of the domestic routes cancelled by South African Airways could be reinstated sooner than later. Gordhan told Business Day that the government proposed a firmed-up route network plan to the business rescuers of South African Airways because he did not want the airline to lose market share. The government had earlier indicated it was against the decision to close all domestic routes except for flights between Johannesburg and Cape Town. Gordhan said he wanted a firmed up route network plan sooner than later to ensure certainty that SAA was operating on particular routes. A decision on opening closed routes can only be taken by the business rescue practitioners.
- Nedbank has frozen the salaries of 50 executives which include the group’s executive committee and its retail and investment bank divisions following a share price slump. The bank wiped nearly R2bn off its market cap in early trade yesterday before recovering after it reported that its profits were 6.7% down for the year. Nedbank said the weak economy and an increase in bad debt hit their profits. Shares in the green bank dropped by more than 7.5% on Tuesday, but recovered somewhat yesterday and ended the day 0.85% higher.
- Shareholders in Sirius Minerals, Britain’s biggest mining project in the North Yorkshire, have voted in favour of Anglo American’s £450 million bid to buy the fertilizer maker. It is expected to save hundreds of jobs in Northern England. The vote came despite efforts by an activist investor Odey Asset Management who said the offer was too low. Of the votes cast, 80% were in favour of the resolution to back the deal. Sirius shares jumped by 17%.
- The Rand firmed early yesterday pushed by the surprise rate cut by the US central bank after a sharp drop when data showed that the SA economy was in recession. In morning trade, the rand rose by 0.36% against the US dollar trading at R15.22 to greenback before it softened to R15.34 at the end of the trading day. SA bonds also gained for the second day. In other market news, gold miners are again benefitting from the metal’s haven appeal tied to the spread of the coronavirus. Shares in Harmony Gold rose by 5.75%, Gold Fields also climbed by more than 5% and AngloGold stocks rose by 4.38%.
