PRETORIA (Reuters) – South Africa’s central bank will not react to the sharp sell-off in the rand after Donald Trump’s victory in U.S. presidential elections as it is a one-off event, Governor Lesetja Kganyago said on Wednesday.
“We do not react to an event,” Kyanyago told financial market experts and reporters at a forum. “To the extent that this is a once off event, it has no impact on rates trajectory.”
(Reporting by Stella Mapenzauswa; Editing by Tiisetso Motsoeneng)
PARIS (Reuters) – French state-controlled utility EDF is ready to take part in a tender offer for nuclear plants in South Africa, an EDF official said on Wednesday.
South Africa wants to build 9.6 gigawatts of nuclear power capacity by 2030, but the government has delayed tendering for new nuclear power stations after requests for consultation and discussions made it impossible to start the process by the end of September as initially planned.
“We are ready to take part in the tender,” Simone Rossi, head of EDF’s international division, told reporters at a presentation of the utility’s projects in Africa.
South African utility Eskom operates two French-built pressurised water nuclear reactors that generate about five percent of the country’s electricity. They were commissioned in 1984-85 and each have a capacity of more than 900 megawatts.
(Reporting by Benjamin Mallet; Writing by Geert De Clercq; Editing by Sudip Kar-Gupta)
JOHANNESBURG (Reuters) – South Africa’s rand tumbled as much as four percent on Wednesday along with other emerging market currencies after investors were rattled by a shock win for Republican Donald Trump in the fiercely-contested U.S. election.
Trump scored a surprising win over Democrat Hillary Clinton, opening a path to the White House for the political outsider seen as a risk to global growth as he has pledged to renegotiate trade deals, impose high import tariffs and stirred fears of a currency war with China.
By 0945 GMT the rand had slumped 2.99 percent to 13.5850 per dollar after falling to session low of 13.8300, its weakest since Oct. 31.
“The question now is what will a Trump victory mean for the performance of SSA (sub-Saharan Africa) markets. Near-term in any risk off environment, the ZAR (rand) is likely to be most impacted,” said Razia Khan, chief economist, Africa at Standard Chartered bank.
“As the market focus gradually shifts to the kind of policy we are likely to see, and the implications of a Republican Congress and Presidency both in favour of further fiscal stimulus, there are likely to be more meaningful implications for SSA markets.”
Government bonds weakened alongside the currency, and the yield for the benchmark instrument due in 2026 was up 12.5 basis points to 8.785 percent.
The stock market opened lower, down more than 2 percent before recovering slightly. At 0957 GMT, the Top-40 index was up by 0.31 percent, while the broader all-share rose by 0.21 percent.
(Reporting by Mfuneko Toyana and Olivia Kumwenda-Mtambo; Editing by James Macharia)
By Asma Alsharif and Eric Knecht
CAIRO (Reuters) – Egypt expects to receive $2.75 billion in aid from the International Monetary Fund as early as next week, part of a $12 billion loan package it hopes will avert an economic crisis and halt a slide in its newly floated currency.
Import-dependent Egypt has struggled to attract dollars and revive its economy since the 2011 uprising that ended Hosni Mubarak’s 30-year rule drove away tourists and foreign investors, essential sources of hard currency.
Facing a gaping deficit, plummeting foreign reserves and a burgeoning currency black market, it agreed a $12 billion loan with the IMF in August but had to secure $5 billion to $6 billion in bilateral financing for the deal to be finalised.
Egyptian officials said they were ready to make the final push for the loan after the central bank abandoned its currency peg to the U.S. dollar on Thursday in a dramatic move welcomed by the Fund and World Bank.
The Washington-based lender said on Tuesday it would review and was likely to approve Egypt’s programme on Friday.
Egypt’s Deputy Finance Minister Ahmed Kouchouk told Reuters he expects an initial disbursement of $2.75 billion as early as next Tuesday should the board grant approval.
Finance Minister Amr El-Garhy said all $6 billion in bilateral financing required ahead of the loan had now been secured and a letter of intent outlining the government’s reform programme was sent on Monday to the IMF.
The financing included a $2.7 billion currency swap with China along with funding from the World Bank, the United Arab Emirates and Saudi Arabia.
“Over the past few months, the Egyptian authorities have embarked on an ambitious reform program to put the country’s economy on a sustainable path and achieve job-rich growth,” IMF Managing Director Christine Lagarde said in a statement.
“I will recommend that the board approve Egypt’s request.”
Clinching the IMF deal would be a milestone in Egypt’s efforts to restore confidence in an economy battered by years of turmoil and a shortage of foreign currency that has stifled business activity and repelled foreign investors unable to cash out their earnings.
Welcomed as a necessary move by business and many economists, Egypt has embarked on ambitious reforms that carry enormous risks for President Abdel Fattah al-Sisi, who seized power in mid-2013 promising to restore stability after a year of divisive Islamist rule.
Since taking power, the general-turned-president has struggled to transform tens of billions of dollars of aid from Gulf Arab allies into sustainable growth for a weary populace.
But unlike previous governments, which have shied away for decades from politically sensitive measures, Sisi’s government has imposed a value-added tax, cut power subsidies, raised fuel prices and floated the pound, all in the space of three months.
Though Egyptians have complained of rising inflation and biting austerity, the government has said there was no going back as the country could no longer afford delays.
SINK OR SWIM?
The IMF cash should help stabilise the pound after its peg of 8.8 pounds per dollar was ditched on Thursday to help draw in capital, crush a booming black market for dollars and help banks starved of foreign currency clear months-old backlogs.
On the third day of interbank trading the pound dropped to nearly 18 per dollar, in line with black market rates that had risen rapidly and brought business to a near standstill in the days before the float.
Banks have been opening daily until 9 p.m. this week to accept dollar deposits and sales while the government has broadcast messages on Egyptian radio calling on the public to shun the black market and use the banks.
Anxious Egyptians have stashed dollars under mattresses in recent months as a hedge against inflation, which has soared above 14 percent.
It is not clear how many dollars have come into banks since the float, but bankers and business people said some black market dealers had been forced to sell dollars into the banking system as they struggled to find buyers.
“I don’t think people will jump right back to the black market because the banks are trying to get the liquidity from the black market as well,” one commodities trader said.
Maintaining its currency peg had slashed foreign reserves to $19.041 billion in October from about $36 billion just before the 2011 uprising.
Governor Tarek Amer said last week that the central bank is targeting dollar reserves of about $25 billion by year-end, including pledges from China, G7 countries, and Arab allies.
Austerity measures are expected to intensify, although the government insists it will protect the poor by keeping subsidies on staples such as bread untouched.
The central bank allocated over $1 billion last month to help stockpile cheap essentials at food outlets where the poorest citizens shop.
Businesses and traders said they were unfazed by the pound’s slide in recent days and expressed relief that the currency black market may finally dry up.
“At least now things are more stable. We used to update our price list every two hours because our suppliers kept changing the prices,” the owner of a furniture factory said.
“Now we update our price list once at the end of every day.”
(Reporting by Asma Asharif, Lin Noueihed, Arwa Gaballa and Eric Knecht; Writing by Lin Noueihed and Eric Knecht; Editing by Andrew Torchia and Catherine Evans)
JOHANNESBURG (Reuters) – South Africa’s big four banks will see a rise in problem loans in the next 12 to 18 months as the economy struggles to grow, but this poses only a moderate risk to profits, ratings agency Moody’s said on Tuesday.
Sluggish economic growth, forecast by the government to average 0.5 percent this year, will pose challenges for FirstRand, Standard Bank, Barclays Africa Group and Nedbank.
“The subdued South African economy will restrain their lending growth and make it harder for borrowers, especially households, to service their debt repayments,” said a Moody’s vice president Nondas Nicolaides.
Rising interest rates and inflation above the central bank’s target of 6 percent will also expose banks to higher default risks, the agency said.
Moody’s said it expects non-performing loans ratios in the banking sector to increase to around 4 percent by end-2017 from 3.2 percent in June 2016, which will dampen profitability as it leads to higher provisioning costs.
“FirstRand Bank is best-placed to manage the weak operating environment among its local peer banks,” Moody’s said.
“FirstRand also has the highest overall provisioning coverage for non-performing loans, the highest capital base and strong earnings generation.”
South Africa’s government last month lowered its GDP growth forecast for this year from 0.9 percent expected in February, and cut its estimate for 2017 to 1.3 percent from 1.7 percent previously.
(Reporting by TJ Strydom; Editing by Joe Brock)
JOHANNESBURG (Reuters) – South Africa’s borrowing costs would likely “double or triple” if ratings agencies downgraded the country’s debt to subinvestment grade in the coming months, Deputy Finance Minister Mcebisi Jonas said on Tuesday.
Jonas said debt servicing costs were the highest growing item in October’s medium-term budget and along with low growth would force government to cut welfare spending.
Standard & Poor’s and Fitch both rate South Africa’s debt on the lowest investment grade level and are due to give their next reviews in December.
(Reporting by Mfuneko Toyana; Editing by Joe Brock)
JOHANNESBURG (Reuters) – Imports of cold-rolled steel products, particularly from China, are hurting South African producers, initial findings from a local trade agency showed on Monday, potentially paving the way for additional import duties.
Domestic steel producers have said China, which produces half the world’s steel, has been dumping excess output locally as consumption at home wanes and, these low-priced imports have resulted in low sales volumes for the domestic firms.
The International Trade Administration Commission of South Africa (ITAC) launched an investigation in July into whether to impose safeguard duties, also known as emergency tariffs, on imports of cold-rolled steel from a number of countries including China, at the request of steel maker ArcelorMittal South Africa.
South Africa had previously said it is considering imposing emergency tariffs on some iron and steel imports in a filing to the World Trade Organization.
Pretoria slapped a 10 percent tariff on imported steel in August last year, but the emergency tariff, which would not apply to imports of stainless steel or silicon electrical steel, would provide much greater protection.
ITAC said in its report released on Monday that the steel sector had suffered “serious injury” as sales and output volumes dwindled and market share declined after a surge in steel imports.
But it did not impose provisional measures as it took into account the possible positive effect of the tariff increase introduced in August last year.
Its report was based on data from ArcelorMittal South Africa, which accounts for 83 percent of local production of the affected goods.
Emergency tariffs are used against an unforeseen surge of imports that threatens domestic producers. They are usually imposed for three years and there is no upper limit on how high the duty can be.
(Reporting by Nqobile Dludla; Editing by James Macharia)
CAIRO (Reuters) – Saudi Aramco informed Egypt that it will be halting shipments of petroleum products to Egypt “until further notice,” an Egyptian official told Reuters on Monday.
The official said Aramco did not give a reason for halting the shipments.
“We have launched tenders to cover the needs for November,” the official said.
(Reporting by Ehab Farouk, editing by Louise Heavens; writing Asma Alsharif)
JOHANNESBURG (Reuters) – South Africa’s net foreign reserves fell slightly to $41.799 billion in October from $41.953 billion the previous month, the Reserve Bank said on Monday.
Gross reserves were, however, up at $47.848 billion from $47.247 billion, the central bank’s data showed.
The forward position, which represents the central bank’s unsettled or swap transactions, also rose to $2.495 billion in October from $2.201 billion in September.
(Reporting by Stella Mapenzauswa; Editing by Jacqueline Wong)
By George Obulutsa
NAIROBI (Reuters) – Safaricom raised its forecast for full-year core profit on Friday after a 31 percent jump in the first six months of the year, driven mainly by growth in revenue from mobile data services.
Safaricom said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to March 31 to come in at 94 billion shillings ($925 million) to 97 billion, up from a previous range of 89 billion to 92 billion.
“Mobile data is our fastest growing revenue stream, and we will focus on increasing the numbers of 3G and 4G smartphones on our network through launching more 4G sites and offering affordable smart devices,” the company said in a statement.
Safaricom, which is 40 percent owned by Britain’s Vodafone and by far the leading mobile phone operator in Kenya, said revenue from mobile data services surged 46 percent to 13.4 billion shillings in the six months to the end of September.
For the first time, revenue from non-voice services accounted for more than half of Safaricom’s overall telecoms services revenue, contributing 53 percent, up from 47 percent last year and 49 percent in the year to the end of March 2016.
Overall, Safaricom’s EBITDA rose 31 percent to 50.8 billion shillings in the period from 38.8 billion shillings in the same period in 2015 while pre-tax profit also jumped 31 percent to 34.5 billion shillings.
Safaricom shares, which had climbed 7 percent this week ahead of the results, were 1 percent lower on Friday at 21 shillings at 1100 GMT. Earnings per share rose to 0.60 shillings from 0.45 shillings.
The company that pioneered the successful M-Pesa mobile money transfer service said it had spent 18.9 billion shillings in the first half as part of efforts to broaden the reach of high-speed mobile internet across the east African country.
Its 4G service now covers 32 out of 47 counties in Kenya and its 3G network reaches 80 percent of the population.
Chief Financial Officer Sateesh Kamath said he expected Safaricom to have close to 1,100 base stations with 4G by the end of March, up from 635 at the end of September.
Safaricom’s overall service revenue, which includes all telecoms services but strips out items such as handset sales, rose to 98 billion shillings from 84.9 billion shillings.
M-Pesa revenue jumped 33.7 percent to 25.9 billion shillings from 19.35 billion shillings while revenue from phone calls edged higher to 45.7 billion shillings from 45.2 billion.
($1 = 101.6000 Kenyan shillings)
(Editing by David Clarke)
