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Rand firms after Ramaphosa announces $14.7bn China investment

The news that China will invest in the local economy has supported some foreign inflows.

South Africa’s rand firmed more than 1% on Tuesday to a three-day best after President Cyril Ramaphosa said China would invest $14.7 billion (R195 billion) in the local economy, spurring some offshore demand for the currency.

At 11:45 GMT the rand had firmed 1.04% to 13.3200 per dollar, its firmest since Thursday.

Ramaphosa was speaking at a news conference on Tuesday after talks Chinese President Xi Jinping.

Traders noted that a sliding greenback had lifted most emerging market currencies, and that the size of the rand’s move firmer was partly down to low trading liquidity.

Read: Eskom, Transnet to also get cash injections from China 

News of the investment by China had soothed sentiment rattled by a score of patchy economic indicators, traders said.

“The news that China would invest in the local economy has supported some foreign inflows,” said senior trader at Standard Bank Oliver Alwar.

“One of the low hanging fruit for policy makers is boosting sentiment and the announcement by the Brics envoys could tip the scales a little bit,” said economist at ETM Analytics Halen Bothma.

Leaders from the Brics group of emerging economies – Brazil, Russia, India, China and South Africa – will meet from Wednesday until Friday in Johannesburg for their 10th annual summit.

The rand has seen volatile trade in the past two weeks, and fell sharply last Thursday when the central bank warned that risks to inflation were rising and the outlook for economic growth had worsened.

The currency however remains a favoured carry-trade target owing to the return offered by low inflation and relatively high lending rates against a backdrop of economic reform promised by Ramaphosa since his election in February.

Bonds also gained, with the yield on the benchmark paper due in 2026 up 3.5 basis points to 8.74%.

Stocks were marginally firmer, with the Johannesburg Stock Exchange’s Top-40 index up 0.53% at 50 751 points. 

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Ah the selling of the countries soul to bail out the SoE’s. Look through Africa to see where China has “helped” the country and see what they got in return for their funding

Do you guys have anything positive to say?…This is when you are supposed to say ” Well done Cyril”…

with the ANCR nothing is ever what we see, behind the scenes it’s business as usual, it’s the ANC dna.

“Cyril is die Baas van ‘n bankrot plaas”…there, both positive and negative combined.

Has anybody fleshed out what the chinese, saudi, etc “investments” involve? Are they buying treasuries or investing equity into ventures or giving loans for chinese suppliers to build infrastructure???

They will not be funding any BEE deals. They are exempt from “empowerment” transactions because they are classified as being “previously disadvantaged” 🙂

Eskom and Transnet are getting cash injections from china. In exchange for what is the million dollar question but cash injection sounds suspiciously like what a equity shareholder would do.

Brics bank is a loan without announcing the interest we will be paying nor the due dates of repayment.

The rest is being non-disclosed at the moment from what I can tell.

The country needs money but selling our future is hardly a plan.

These countries could state an investment figure, one that they know they already invest in South Africa on an annual basis. Who will follow up?

So in contrast to WMC, YMC is OK – oh the irony and hypocrisy of the anc who still cannot spot a colonising force even after 350 years! careful ramaphoza the Chinese will ty your lot in tiny little knots forever and SA’s payback will be dire!

“Rather go to bed without dinner than to rise in debt” – Benjamin Franklin.

Out of all of these investments that have come through, one crucial thing is missing – these so called generous countries their pumping cash into our shores in exchange of what exactly – THERE’S NO FREE LUNCH FELLOWS

This is modern colonialism clothed as investment

This is how the Chinese work, they lend you the money and then the build the project.

What they want in exchange is your resources and the interest. There is no hiding from these guys and as much as I dislike the Americans, the Chinese are more scarey. A pound for a pound and a half.

But hey sell the souls South Africans, we know the anc leaders want their payment for helping to negotiate an end to apartheid.

I’m not paying for It, put your money into Bitcoin and hedge their circus whilst your money still has value.

Ramaphosa is Winning and We wish him well

Don’t know if we can call Winning more debt a success, the Chinese don’t give money, they only offer loans, a current example – Chinese build highway in Montenegro –

“A Chinese loan for the first phase has sent Montenegro’s debt soaring and forced the government to raise taxes, partially freeze public sector wages and end a benefit for mothers to get its finances in order.” –

“poor countries across Asia and Africa have seized on attractive Chinese loans and the promise of transformative infrastructure projects.” –

“But some countries, such as Sri Lanka, Djibouti and Mongolia, have found themselves weighed down by debt and ever more reliant on Beijing’s largesse.” –

“The option it now favours is a public private partnership (PPP) in which an outside partner would build and operate the highway, then run it under a concession from the state for 30 years to get a return on their investment.”

“China Road and Bridge Corporation (CRBC), the large state-owned Chinese company that is building the first section, signed a memorandum of understanding (MOU) in March to complete the rest of the road on a PPP basis.”

and now the interesting part –

“terms of the contract, an arbitration court in China would have jurisdiction in the event of any legal dispute. CRBC won commitments that all imported construction materials, equipment and other goods be exempt from customs and value-added tax. Chinese workers were given 70 percent of the work.” –

“IT worries that the deal with the Chinese will end up giving Beijing much more influence over Montenegro. – “It puts the Chinese in a very, very comfortable position,”

this is what is coming to SA, CR will get his share, and we will pay for China’s very, very comfortable position.
Reuters 16 July 2018. – ‘highway to nowhere’

Ramaphosa activated the controversial Protection of Investment Act….further deterring investors. Going to tax ETF’s more….further detering savings. How is CR winning while the land is loosing ???

The ”wall of money” is slowly starting to flow back in!

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