SIKI MGABADELI: Good evening and welcome to the Friday edition of the SAfm Market Update with Moneyweb. My name is Siki Mgabadeli.
The MPC, as you now know, has decided to keep interest rates unchanged. So the repo rate stays at 5.75% per annum. That’s what most economists had expected. Actually, I haven’t spoken to anyone who expected a rate hike, but some had been kind of hoping possibly on the off-chance for a rate cut. We are going to unpack that decision in a few minutes.
South Africa lost R237bn in illicit financial flows in 2011, and over R1trn between 2002 and 2010. That’s despite some regulatory preventive measures here in South Africa, according to a report by NGO Africa Monitor. We speak to them this evening.
And GIBS, the Gordon Institute of Business Science, hosted a seminar today looking at South Africa’s economic outlook for 2015 – the risks, the opportunities and the impact on business. That’s what we are going to be talking about.
David Shapiro of Sasfin, our award-winning market watcher, is here with us today. But first, Tumisang Ndlovu has your business news headlines.
TUMISANG NDLOVU: Thanks, Siki. Good evening.
The interest rate remains at 5.75% and the lending rate at 5.25% Reserve Bank governor Lesetja Kganyago made the announcement earlier today following the Monetary Policy Committee’s first three-day meeting for the year. Economist Chris Hart says the decision was informed by the current inflation relief, the lower international oil price and a slightly stronger rand.
CHRIS HART: It’s due to the second-round effect of the oil price, the rand remaining reasonably stable. I think that we are going to start telegraphing even the possibility of cuts later this year.
TUMISANG NDLOVU: Some more good news for consumers. Analysts are predicting a petrol price decrease of at least 90c/litre. This would bring the petrol price to its lowest level since 2012. South Africa kicked off 2015 with a petrol price drop of over R1 /litre. That sizeable adjustment follows several other decreases in the months before. The energy department is expected to announce the February fuel price adjustment tomorrow.
On the eve of the South African Airways annual general meeting analysts remain sceptical that the latest R6.5bn government guarantee will help turn around the struggling parastatal. The national carrier’s current debt on guarantees stands at R14.5bn. As part of conditions that come with the latest guarantee SAA must finalise its financial statements for the year 2013/14. Efficient Group chief economist Dawie Roodt has his views.
DAWIE ROODT: If you calculate how much money we the taxpayers have given South African Airways in the past couple of years by way of subsidies, it’s in the region of about R20bn. My suspicion is in this case that they are going to borrow the money from the bank or the capital market or wherever, and eventually that money will be paid off by us, the taxpayers.
TUMISANG NDLOVU: And Eskom says chances of load-shedding have minimised. This as the parastatal says the power grid is relatively stable, following three days of consecutive blackouts. But the power utility, which continues to face financial and electricity supply challenges, has again urged consumers to use energy sparingly.
Financial indicators this hour: the rand is trading at R11.51/dollar, R17.38/pound and R13.06/euro. Gold is trading at $1 269.88/oz, platinum at $1 233/oz and Brent crude oil at $49.13/barrel.
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