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SA budget preview – staying the course on fiscal consolidation
Sound fiscal management and commitment to reform necessary to allay rating agencies’ fears of political interference

With many indicators of economic development in SA falling short of its debt peer group, broad political/institutional stability and macro policy continuity remain key in preserving SA’s investment grade status.
As such, all eyes will be on government’s ability to stay the course on sound fiscal management in the upcoming national budget to be tabled by National Treasury on 22 February 2017. Click here to read more.

State of the Nation Address – government’s agenda for 2017 – 10 February 2017
Elevated policy uncertainty has increased market awareness around the State of the Nation Address (SONA) – an annual report on the state of the country’s affairs, progress on government’s priorities and an outline of government’s agenda for the coming year. Click here to read more.

SA repo rate held steady, while global risks keep tone cautious – 24 January 2017
Interest rates steady in line with expectations

Today’s interest rate decision was in line with  the Reuters consensus, in which all surveyed analysts predicted that interest rates would stay on hold at 7.0%. Click here to read more.

Asset class returns in 2017 determined by monetary/fiscal policy switch – 14 December 2016 
Stimulus baton passed from monetary to fiscal policy in the developed world
Developed market (DM) monetary policy stimulus most probably has moved beyond its peak, with limited scope for more policy accommodation through interest rate cuts and quantitative easing (QE) against the backdrop of historically low interest rate levels, bulging central bank balance sheets, accelerating inflation and mounting evidence of diminishing effectiveness. Meanwhile, disgruntled DM voters have intensified pressures on politicians to improve their economic circumstances by making their voices heard in a tangible way through the ballot box in 2016. Click here to read more.

2017 Economic outlook: Politics taking centre stage – 13 December 2016 
Political uncertainty continues to dominate the economic outlook  

The global economy has undergone a prolonged period of disappointing growth following the worst financial crisis since the Great Depression in the 1930s. Several structural factors, including ageing populations, over-indebtedness (see chart 1) and weak productivity, have stifled the uneven economic recovery following the 2008/2009 global financial crisis. Click here to read more.
 
Ratings reprieve, but S&P echoes concerns over political interference – 5 December 2016

S&P lowers local currency rating, but leaves foreign currency rating intact at BBB- with a negative outlook
Although S&P Global Ratings left SA’s foreign currency rating unchanged at BBB- with a negative outlook, the agency noted that financing needs had surprised negatively exceeding previous expectations, while a low ‘gross domestic product (GDP) growth path has exacerbated SA’s economic (per capita wealth) and fiscal performance. Click here to read more. 

Fitch and Moody’s ratings reviews – political instability is a shared concern
Fitch lowered its outlook to negative, but the rating remains unchanged for Fitch and Moody’s

Fitch Ratings lowered its outlook on SA’s long-term sovereign debt rating to negative from stable, but kept the rating intact at BBB-. Moody’s, which rates SA one notch higher than S&P Global Ratings or Fitch at Baa2, left the rating (and the negative outlook on the rating) unchanged.
A common concern voiced by both ratings agencies was the current state of political affairs in SA. Please click here to read more.

Interest rate policy held steady, but tone remains cautious – 25 November 2016 
Interest rates steady in line with expectations

Yesterday’s interest rate decision was in line with the market’s expectation. All 15 respondents to the Bloomberg survey expected the repurchase rate to remain on hold at 7.0%. Please click here to read more.
 
October’s headline rate of inflation rises above expectations – 24 November 2016
Headline inflation exceeded expectations, but is likely nearing a peak

Headline consumer price inflation (CPI) rose to 6.4% y/y, marginally higher than Momentum Investments’ own and the market’s estimate for October 2016. In month-on-month (m/m) terms, inflation increased by 0.5%, partly owing to higher food and transport costs. Please click here to read more.

President Trump – the next step in global disestablishmentarianism – 9 November 2016
The shock outcome to the US presidential race has roiled global financial markets. At the time of writing, S&P futures were down around 2%, while the Japanese Nikkei lost 5.4%. The Mexican peso, which has acted as a barometer for a Trump win in the US elections, plummeted around 8%, with losses extending to a wider range of emerging market (EM) currencies. Asset classes traditionally viewed as safe-havens were bid higher. The spot price of gold rose 2.3%, while the Japanese yen gained 2.1%. Similarly, US bond yields dropped initially on a flight-to-quality trade, but later retraced on fiscal worries. Click here to read more. 

MTBPS 2016: Additional taxes and spending cuts used to negate weaker growth impact on fiscus - 26 October 2016
In its 2016 Medium-Term Budget Policy Statement (MTBPS), South Africa’s National Treasury unsurprisingly revised its estimates of real GDP growth lower to around 1.5% p.a. between the current fiscal year (FY2016/17) and FY2018/19...Click here to read more.

SA medium-term budget – constrained resources facing multiple demands - 21 October 2016
Since the tabling of the National Budget in February 2016, downside growth risks to the global economy have materialised. In its latest October 2016 World Economic...Click here to read more.

Finance Minister Gordhan’s summons lifts SA’s political temperature - 12 October 2016
South Africa’s political risk profile was lifted yesterday when the National Prosecuting Authority issued Finance Minister Pravin Gordhan, together with former South Africa Revenue Service (SARS) Commissioner Oupa Magashula and former SARS Deputy Commissioner Ivan Pillay...Click here to read more.

2Q16 GDP recovery influenced by low base in mining and manufacturing - 6 September 2016
Real GDP growth increased by 3.3% in the second quarter of the year relative to the first quarter in seasonally-adjusted annualised terms (saar).Click here to read more.

August PMI sinks below 50 - 1 September 2016
The Barclays/Bureau of Economic Research (BER) Purchasing Managers’ Index (PMI) plunged 6.2 points to 46.3 points in August 2016, signalling tougher...Click here to read more.

Financial pressure on households negatively impacting private sector credit growth - 31 August 2016
Growth in broad money supply (M3) slowed markedly from 5.9% y/y in June to 4.4% y/y in July 2016, coming in below the market’s expectation for a decrease...Click here to read more.

Inflation slows towards top end of target band - 24 August 2016
Headline consumer price inflation (CPI) dipped to 6.0% y/y in July 2016 from 6.3% y/y in June, in line with our own estimate and marginally lower than the Bloomberg median expectationClick here to read more.

2016 Local government elections under the spotlight - 8 August 2016
Having grown steadily since the 2000 municipal elections, this year has seen a record number of political parties contesting the 2016 local government elections. Click here to read more.

July PMI dips slightly, but still points to a relatively firm start in 3Q16 - 1 August 2016
The Barclays/Bureau of Economic Research (BER) Purchasing Managers’ Index (PMI) fell by 1.2 index points to 52.5 in July 2016. Readings above 50 signal an expansion ...Click here to read more.

SARB presses the pause button and keeps interest rates steady at 7% - 21 July 2016
In its latest World Economic Outlook Update, the International Monetary Fund (IMF) noted that the global outlook for 2016/17 has worsened on the back of an increase in political uncertainty. Click here to read more.

No surprise in June headline inflation print - 20 July 2016
According to Stats SA, headline inflation rose to 6.3% y/y in June from 6.1% in May, in line with our own estimate and only marginally higher than the market’s expectations ... Click here to read more.

Deterioration in 2Q16 consumer confidence - 5 July 2016
The Bureau of Economic Research’s (BER) Consumer Confidence Index (CCI) fell two points from a reading of negative 9 index points in the first quarter of the year to negative11 points in ... Click here to read more.

The Brexit reality: Britain votes to leave the European Union - 24 June 2016
Voter turnout in Britain’s referendum on European Union (EU) membership was high at 72.2% (33.6 million ballot papers). This was lower than the c.82% turnout for the Scottish ... Click here to read more.

May headline inflation print surprises positively - 22 June 2016
Headline inflation dropped to 6.1% in May in year-on-year terms, undershooting our own (6.3%) and the Bloomberg consensus (6.4%) forecast ... Click here to read more.

Making sense of the June 2016 US Federal Reserve rate-setting meeting - 21 June 2016
A dismal payrolls print for the month of May (38 000 jobs added versus a consensus expectation for a 162 000 gain) led to a significant repricing of interest rate hike expectations... Click here to read more.

Fitch retains stable outlook, but warns against weak economic growth - 13 June 2016
A positive outcome by Fitch rating agency followed an earlier decision by Moodys and S&P to leave SA’s ratings unchanged at Baa2 (with a negative outlook)... Click here to read more.

Material slowdown in real GDP growth in 1Q16 - 13 June 2016
Stats SA reported a material slowdown in real GDP growth from 0.4% q/q saar (seasonally adjusted annualised rate) in the final quarter of 2015 to -1.2% in 1Q16... Click here to read more.

2Q16 Growth concerns rise in response to weaker business confidence - 13 June 2016
The Bureau of Economic Research’s (BER) Business Confidence Index (BCI) decreased for the sixth consecutive quarter, declining to its weakest level since the fourth quarter of 2009.. Click here to read more.

SA dodges the downgrade bullet for now - 6 June 2016
In line with our and the market’s expectations, S&P Global Ratings kept SA’s long-term foreign currency sovereign credit rating at BBB- and affirmed the local currency rating at BBB+. Click here to read more.

SA manufacturing PMI adjusts lower in May - 1 June 2016
After jumping 4.4 index points higher in April, the Barclays/BER Purchasing Managers’ Index (PMI) declined by 3.0 index points in May to 51.9. Click here to read more.

South Africa sovereign debt downgrade risk - 1 June 2016
South Africa’s sovereign debt is currently rated investment grade (IG) by all three main rating agencies (see table 1). While both S&P and Fitch now have SA’s foreign currency government debt rating at the lowest rung of IG (BBB-)... Click here to read more.

SARB pauses to reflect on previous interest rate tightening - 19 May 2016
In a recent speech the South African Reserve Bank (SARB) noted that heightened uncertainty had complicated the conduct of monetary policy. In their assessment of the global economic backdrop, they mentioned a number of key economic risks threatening the outlook for global economic activity. Click here to read more.

Tough road ahead for SA consumers implies weak GDP performance - 18 May 2016
The National Development Plan outlines the need to shift South Africa’s (SA) growth trajectory from one led by consumption to higher levels of fixed investment and exports (see chart 1). Higher levels of investment (supported by reliable public infrastructure and skills) are needed to propel living standards and reduce inequality. However, conditions for higher fixed investment remain unfavourable. Falling corporate profitability, muted domestic demand prospects and continued uncertainty around the direction of economic policy in SA has led to sluggish growth in private fixed investment, leaving overall economic activity dependent on household consumption spend. Click here to read more.

April headline inflation print in line with expectations - 18 May 2016
Year-on-year inflation dipped to 6.2% in April from 6.3% y/y in March, but increased by 0.8% over the month largely owing to a drought-induced acceleration in food prices. Click here to read more.

Pace of improvement in April PMI unlikely to be sustained - 3 May 2016
In a recent speech, the South African Reserve Bank (SARB) pointed to a key threat facing the SA economy. Like many other net commodity-exporting nations, SA has faced a terms-of-trade (export prices relative to import prices) shock as a result of the persistent decline in commodity prices since 2011.. Click here to read more.

SARB hikes repo rate to 7% in line with inflation-targeting mandate - 17 March 2016
In a recent speech, the South African Reserve Bank (SARB) pointed to a key threat facing the SA economy. Like many other net commodity-exporting nations, SA has faced a terms-of-trade (export prices relative to import prices) shock as a result of the persistent decline in commodity prices since 2011.. Click here to read more.

Making sense of the March US Federal Reserve rate-setting meeting - 17 March 2016
In line with the consensus expectation (see chart 1) the US Federal Reserve (Fed) left interest rates on hold at the March rate-setting meeting at the effective rate of 0.36%. The Fed continues to face conflicting signals in the real economy. While labour market data paints a robust employment picture in the US, growth momentum has slowed. Click here to read more.

SA businesses facing increased uncertainty - 13 March 2016
The Global Economic Conditions Survey (produced by the Association of Chartered Certified Accountants) revealed that global firms remained gloomy about their prospects in 4Q15. The survey reported that 44% of respondents were less confident than they had been three months earlier; only slightly fewer than in 3Q15, when businesses were at their most pessimistic in four years. Click here to read more.

Turning South Africa's economic challenges into opportunities - 1 March 2016
There is little doubt that South Africa faces a myriad of challenges constraining the country’s growth potential and negatively affecting the general well-being of its citizens. Click here to read more.

SA Budget FY2016/17 – delaying difficult decisions - 24 February 2016
The tax measures announced in the February 2016 budget were less detrimental to the SA consumer than feared. In reaction to the announcement, the FTSE/JSE ALSI reacted positively, regaining some lost ground to close 0.9% lower on Wednesday from 2.0% lower prior to the budget speech. Click here to read more.

SARB Monetary Policy meeting - 28 January 2016
Despite signs of a weakening domestic economy, the South African Reserve Bank (SARB) raised interest rates by 50 basis points in an effort to contain rising prices. A sharp 12.9% depreciation in the trade-weighted currency since the November meeting, drought-inflicted food price shocks and the potential burden of an additional c.17% electricity tariff increase. Click here to read more.

Making sense of the September US Federal Reserve rate-setting meeting (18 September 2015)
Although the US Federal Reserve (Fed’s) growth and unemployment forecasts have improved relative to their June 2015 economic projections, they have become more sanguine on the medium-term inflation outlook. Click here to read more.

Retail sales growth exceeds market expectations (17 September 2015)
Stats SA reported a 3.3% y/y rise in retail sales volumes in July, lower than the (upwardly revised) 3.8% y/y growth rate reported in June, but notably higher than the 2.4% y/y increase captured by the INET BFA consensus estimate. Click here to read more.

Expenditure side of SA GDP reflects pressure on demand (16 September 2015)
The South African Reserve Bank’s (SARB) Quarterly Bulletin confirmed that real GDP growth slowed to 1.6% y/y in 2Q15 from 2.0% y/y in 1Q15. The expenditure breakdown of GDP also highlighted slower growth in domestic demand relative to the performance in overall economic activity. Click here to read more.

No quick turnaround expected in SA’s mining and manufacturing sectors (11 September 2015)
Growth in Stats SA mining production volumes increased by 5.6% y/y in July, increasing from the 5.4% y/y rise in volumes in June. Volumes lifted by 1.1% in month-on-month terms in July, following a 2.0% m/m increase in the previous month. Click here to read more.

Fall in business confidence reflects a weaker domestic trading environment  (10 September 2015)
The Bureau of Economic Research’s (BER) Business Confidence Index (BCI) plunged to 38 index points in 3Q15, from 43 points in 2Q15. Business confidence levels have averaged at an unfavourable 43 index points since the Global Financial Crisis (GFC), reflecting soft economic conditions and an adverse environment for South African businesses to expand on fixed investment. Click here to read more.

Weak manufacturing growth likely in 3Q15  (02 September 2015)
The Barclays/BER Purchasing Managers Index (PMI) declined by 2.5 index points to 48.9 in August, pointing to further pressure in manufacturing, even after the industry contracted over 1H15, more recently plummeting by 6.3% q/q in seasonally-adjusted annualised terms in 2Q15. Click here to read more.

Private sector credit growth edges higher (02 September 2015)
Broad money supply (M3) ramped up by 10.3% y/y in July after growing at a more benign 7.8% y/y average over the prior 12-month period. Nevertheless, growth in broad money supply tracked significantly below the longer-dated average of 12.0% y/y since 2000. Click here to read more.

Making sense of the current global financial market turmoil (26 August 2015)
Ever since China started devaluing their currency on Monday, 17 August, a couple of days after weak export numbers were reported, global financial markets have been roiled by increasing ‘risk aversion’ on the back of worries about the impact of China’s perceived faltering growth prospects on the global economy. Click here to read more.

Economic outlook (05 August 2015)
Poor economic performance in 1Q15 points to yet another year of disappointing global growth. Real GDP growth forecasts started the year at 3.5%, but have since been slashed to 3.1%, largely due to emerging market (EM) activity falling short of expectations.  Other than in India, 2015 growth forecasts in most of the key developed and emerging markets have been scaled back over the past 12 months. Click here to read more.

Firm 2Q15 jobs growth of 3.7% y/y at odds with weak GDP indicators (31 July 2015)
According to Stats SA’s Quarterly Labour Force Survey, total employment increased by 3.7% y/y in 2Q15 (1.3% q/q), despite high-frequency growth data pointing to subdued economic activity. The survey suggests that 198 000 jobs were created over 2Q15, while the number of unemployed persons dropped by 305 000, leaving the headline rate of unemployment lower at 25% (from 26.4% in the previous quarter). Click here to read more.

Private sector credit growth dips  (31 July 2015)
Although growth in the broadest measure of money supply (M3) accelerated from 8.4% y/y in May to 8.9% y/y in June, growth in private sector credit extension (PSCE) fell to its lowest level in 18 months. Growth in PSCE slipped to 8.1% y/y in June following a 9.4% y/y increase in May as growth in corporate credit activity slowed to 11.1% y/y in June after averaging 14% y/y since the beginning of 2014. Click here to read more.

SARB resumes interest rate hiking cycle (24 July 2015)
The South African Reserve Bank (SARB) resumed its interest rate hiking cycle, which started in January 2014, by hiking interest rates by a further 25 basis points to 6%. Consensus views were nearly evenly split heading into the meeting, with 17 Bloomberg contributors expecting a rate rise, while 14 suggested that rates would most likely stay on hold. Click here to read more.

June 2015 CPI prints well below consensus forecast (23 July 2015)
Prices related to a number of components in the consumer inflation basket increased by a lower-than-expected rate in June, leaving the official Stats SA CPI print at nearly 0.3% below market expectations. CPI rose marginally to 4.7% y/y in June, from 4.6% in May driven by an increase in housing costs as well as annual price increases in the food and beverages categories. Click here to read more.

May mining and manufacturing activity disappoints (13 July 2015)
Growth in Stats SA mining production volumes disappointed market expectations slowing to 2.7% y/y in May from an upwardly-revised 7.9% y/y (prev. 7.7%) print in April. Volumes contracted sharply by 4.7% in month-on-month terms for the second consecutive month. Click here to read more.

Greece ‘no’ vote triggers increasingly challenging negotiations (07 July 2015)
Real GDP growth in Greece averaged 4.1% per annum between 2000 and 2007, but plunged to an annual average decline of c.4.0% in the years following the Global Financial Crisis (GFC). With the GFC exacerbating their financial troubles, Greece’s government debt-to-GDP ratio soared from 97% at the end of 2008 to 174% more recently. Click here to read more.

Marginal rise in May private sector credit growth (01 July 2015)
Growth in the broadest measure of money supply (M3) steadied at 8.4% y/y in May, exceeding the Bloomberg consensus estimate for a slowdown in growth to 8.0% y/y. Total private sector credit increased by 9.5% y/y in May, rising from 9.3% y/y in April and bettering the Bloomberg consensus which estimated that growth rates would track sideways at 9.3% y/y in May. Click here to read more.

April 2015 retail sales growth surprises positively (18 June 2015)
The 3.4% y/y increase in retail sales volumes in April was considerably higher than the consensus view for a 1.8% y/y rise and exceeded the upwardly-revised 2.5% y/y print in March. Robust sales growth in pharmaceutical/cosmetic products and building materials was mainly behind the 3.4% y/y increase, but a decent performance by general dealers and clothing/textiles further boosted the headline figure. Click here to read more.

May 2015 CPI inches higher to 4.6% y/y (18 June 2015)
Stats SA headline consumer price inflation (CPI) inched higher to 4.6% y/y in May from 4.5% y/y in April, coming in slightly higher than market estimates. Inflation increased by 0.3% on the month, driven mainly by food prices in the absence of a significant petrol price move in May. Click here to read more. 

Low base benefits mining production, while manufacturing activity weakens (12 June 2015)
Stats SA mining production volumes increased by 7.7% y/y, but declined by 4.1% m/m. The monthly contraction in volumes more accurately reflects the state of the SA mining industry, given that the year-on-year growth rate was largely supported by a strike-affected base in 2014 following prolonged industrial action in the platinum industry. Click here to read more.

Lack of demand drives business confidence weaker (11 June 2015)  
The Kagiso/BER Purchasing Managers’ Index (PMI) recovered from an 11-month low of 45.4 points in April to 50.8 points in May as the number of days affected by load-shedding declined. The month of May also included more working days when compared with the large number of public holidays observed in April. Click here to read more.

May PMI bounces back on fewer public holidays and less load shedding (02 June 2015)  
The Kagiso/BER Purchasing Managers’ Index (PMI) recovered from an 11-month low of 45.4 points in April to 50.8 points in May as the number of days affected by load-shedding declined. The month of May also included more working days when compared with the large number of public holidays observed in April.  Click here to read more.

Momentum Macro Bulletin – A gauge of the global macro temperature (01 June 2015) 
The International Monetary Fund (IMF) expects 2015 global economic activity to grow broadly in line with the rate experienced in 2014. While advanced economies are expected to fare better relative to last year, activity in emerging markets (EM) is anticipated to slow, underscoring the uneven growth theme that has played out post the Global Financial Crisis (GFC). Click here to read more.

Private sector credit rises on higher corporate credit activity (01 June 2015)
Growth in the broadest measure of money supply (M3) accelerated from 7.4% y/y in March to 8.4% y/y in April, bettering market expectations for a rise to 7.6% y/y. Total private sector credit increased by 9.3% y/y in April, higher than the average rate of 8.8% y/y over the past 12-month period and exceeding the market consensus estimate of 9.0% y/y. Click here to read more.

626 000 join SA’s unemployed population in 1Q15 (27 May 2015)
Stats SA has applied a new ‘Master Sample’ to the Quarterly Labour Force Survey data to account for the change in population as recently calibrated in the 2011 population census. The previous survey revision was undertaken in 2007 using data from the 2001 census. Stats SA notes that the largest effect of the new sample was observed in the unemployed and not economically active (including discouraged work seekers, ill/disabled persons and students) data set and should thus be treated with caution. Click here to read more.

Domestic growth slows in 1Q15 (27 May 2015)
Stats SA reported a slowdown in GDP growth from 4.1% q/q saar (seasonally adjusted annualised rate) to 1.3% in 1Q15, missing the consensus expectation for a 1.6% increase, but registering above our internal forecast. The mining and financial services sectors were the largest positive contributors to GDP growth in the first quarter of the year, using the supply-side GDP methodology, while activity disappointed in the manufacturing and agriculture sectors, which shaved off nearly 0.8% from the headline GDP print. In y/y terms, economic activity increased by 2.1% relative to a strike-affected 1Q14 base, up from 1.3% y/y in 4Q14. Click here to read more.

Higher April 2015 CPI inflation confirms the uptrend (22 May 2015)
Headline consumer inflation, as surveyed by Stats SA, increased from 4.0% in March to 4.5% y/y in April, marginally below our internal forecast and the median consensus figure of 4.6% y/y. Relative to our own forecast, prices accelerated more than expected in the non-alcoholic and alcoholic beverages, restaurants and furniture/appliances categories and increased by less than anticipated in the hotels, personal care and vehicles categories. Click here to read more.

SARB holds interest rates steady, but paves the way for hikes (22 May 2015)
The South African Reserve Bank (SARB) kept interest rates on hold at 5.75% today, in line with our in-house view and the unanimous prediction among the 26 analysts polled by Bloomberg. The hawkish tone of the statement, however, led to a temporary strengthening of the currency from 11.76 against the US dollar prior to the governor’s speech, to 11.71 just before the rate announcement, with the rand weakening again to 11.84 directly after the interest rate announcement. Click here to read more.

Retail sales growth falls short of market expectations (22 May 2015)
The 2.0% y/y increase in retail sales volumes in March was markedly lower than the median market expectation for a 3.7% y/y rise. The shallow 2.0% rise in sales followed a downwardly-revised 3.7% y/y increase in February (4.2% y/y previously), while volumes declined by 0.5% m/m. Click here to read more.

Household credit growth remains subdued (30 April 2015)
Growth in the broadest measure of money supply (M3) decelerated from 8.1% y/y in February to 7.4% y/y in March, roughly in line with the average y/y growth rate over the past twelve months. Total private sector credit, on the other hand, increased by 8.9% y/y in March, marginally higher than the 8.7% y/y growth rate recorded in the previous reading. Click here to read more.

March 2015 headline inflation rises  (23 April 2015)
Stats SA reported an increase in inflation from 3.9% in February to 4.0% in March, slightly lower than market expectations, but marginally higher than our internal forecast. Relative to our own forecast, prices accelerated more than expected in the food, alcoholic beverage, rental, education and hotel categories. Click here to read more.

SARB holds rates steady  (30 March 2015)
The South African Reserve Bank (SARB) kept interest rates on hold at 5.75% in line with our in-house view and the Bloomberg consensus, polling 24 economists. The hawkish statement caused a slight weakening of the currency from 11.86 against the US dollar prior to the speech to 11.90 after the speech and prompted a slight weakening in the equity market. Click here to read more.

Higher rand-oil price and poor maize crop lift inflation forecasts (19 March 2015)
Stats SA reported a deceleration in headline consumer price inflation (CPI) from 4.4% y/y in January to 3.9% in February, mainly due to a 1.1% negative contribution from transport prices. Click here to read more.

Smaller trade deficit, but invisibles balance still sticky (18 March 2015)
The South African Reserve Bank (SARB) confirmed that real GDP growth averaged 1.5% in 2014, largely driven by the 4.1% GDP uptick in 4Q14 as manufacturing staged a recovery post the metal and engineering strike in 3Q14. Click here to read more.

South African business confidence dips back into negative territory (12 March 2015)
Although the BER Business Confidence Index remains higher than the 43 index point average reading since the Global Financial Crisis (GFC), the index tipped below the critical 50 mark, signalling negative business confidence in the first quarter of 2015. Click here to read more.

South Africa’s manufacturing sector taking strain (03 March 2015)
The BER/Kagiso headline Purchasing Managers Index (PMI) dropped 6.6 index points to 47.6 points in February, signalling a contraction in industrial production for the month. Click here to read more.

Headline budget unlikely to deviate much (20 February 2015)
Last year’s Medium Term Budget Policy Statement (MTBPS) set the bar for fiscal prudency against a challenging economic backdrop. In light of a deterioration in global growth and subdued commodity prices, National Treasury’s credibility in terms of ensuring medium-term fiscal sustainability remains at stake. Click here to read more.

PMI amplified by low seasonal factor (02 February 2015)
The BER/Kagiso Purchasing Managers Index (PMI) increased by four index points to 54.2 points in January in seasonally-adjusted terms. However, the unadjusted print declined from 51 points in December to 48.2 points in January, suggesting a further contraction in manufacturing output. Click here to read more.

SARB lowers inflation and growth outlook (30 January 2015)
The South African Reserve Bank (SARB) kept interest rates steady at 5.75% in line with market expectations. Although noting the favourable headline inflation impact from the recent sharp drop in oil prices, the Monetary Policy Committee (MPC) noted that any inflation and growth benefits are likely to be temporary. Click here to read more.

Headline inflation dips on lower food and energy prices (21 January 2015)
Lower oil prices have led to further disinflation in South Africa (SA). Stats SA reported headline CPI lower at 5.3% y/y in December, from 5.8% in November. The 5.3% print came in notably lower than both our and the market’s expectations, with inflation in the following categories surprising on the downside: food, rental, hotel and personal care. Click here to read more.

November retail sales growth slows (15 January 2015)
Growth in November’s retail sales volumes slipped to 2.6% y/y from a downwardly revised 3.2% in October (prev.: 3.4%). In m/m terms, however, real sales picked up by a reasonable 0.9% following a 0.6% decline in September and a mild 0.4% uptick in October. Click here to read more.

Electricity supply constraints dampen manufacturing confidence (15 January 2015)
The Kagiso Purchasing Managers Index (PMI) remained above the crucial 50 mark in December, but declined by 3.3 index points to 50.2. This reading left the fourth quarter average of 51.2 points, marginally better than the remaining three quarters of the year, which recorded an average of 48.2 points. Click here to read more.

Firm end to a poor year for vehicle sales (08 January 2015)
Total market sales increased by 11.1% y/y in December 2014, leaving sales for the overall year 0.2% lower than sales recorded over 2013. Over the past five years, December registered an average monthly decline of 11.1%, yet figures for December 2014 surprised markets positively by increasing marginally by 0.7% m/m. Click here to read more.

October’s retail sales surprise positively (12 December 2014)
Stats SA reported a 3.4% y/y (+0.4% m/m) rise in real retail sales volumes in October, surprising the market positively and increasing from the 2.3% y/y rate recorded in September. The c.23% fall in rand oil prices between mid-June and mid-October most likely contributed to higher levels of disposable income, supporting retail sales growth over the corresponding period. Click here to read more.

Inflation to head lower over 1H15 (11 December 2014)
Stats SA reported headline Consumer Price Inflation (CPI) at 5.8% y/y in November, matching the markets’ expectation. The headline figure edged lower from 5.9% y/y in October and is expected to drop further over 1H15 on the back of favourable food and fuel prices. Click here to read more.

NAAMSA’s 2015 vehicle sales estimates remain conservative (04 December 2014)
Total industry vehicle sales growth inched higher by 1.1% y/y in November, decelerating from 4.8% y/y in October. Sales of NAAMSA-only vehicles increased by the same magnitude, slowing from 7.5% y/y a month ago. Click here to read more.

Normalisation in SA manufacturing (02 December 2014)
The BER/Kagiso Purchasing Managers Index (PMI) rose to a fifteen-month high in November 2014. The headline index increased from a revised 50.1 index points to 53.3 due to a broad-based recovery across the contributing sub-components. Click here to read more.

SA business confidence crawls into expansionary territory (27 November 2014)
South African business confidence, as measured by the BER Business Confidence Index, crept back into expansionary territory, following seven consecutive quarters of suboptimal confidence prints. Although the headline index inched higher to 51 points in 4Q14, from 46 the quarter before, two out of the five contributing sectors remained in contraction. Click here to read more.

SARB keeps rates flat (21 November 2014)
We view the latest decision by the South African Reserve Bank (SARB) to keep rates steady at 5.75% as a missed opportunity to gradually normalise interest rates. The latest inflation print showed headline price pressures close to the 6% upper target band, while market inflation expectations tracked sideways since the last monetary policy meeting. Click here to read more.

Another strong contribution to vehicle sales from car rental industry  (05 November 2014)
Total industry vehicle sales grew by 4.8% y/y in October, decelerating from 11.7% y/y in September. Growth figures looked stronger after stripping out the impact of the AAD/AAH vehicle sales, which cater for the entry level vehicles. Click here to read more.

Slow recovery in South African manufacturing conditions  (04 November 2014)
The BER/Kagiso Purchasing Managers’ Index (PMI) rose to levels last seen a year ago, yet still signals only mildly expansionary conditions in the South African manufacturing sector. Click here to read more.

Soft growth in household credit persists  (31 October 2014)
Growth in South Africa’s broadest official measure of money supply (M3) picked up to 7.9% y/y in September, from 6.4% y/y in August, while private sector credit extension tracked sideways at 8.7% y/y over the corresponding period. Click here to read more.

Goods inflation reverses, but services inflation remains sticky (23 October 2014)
Headline consumer price inflation slowed to below market forecasts, registering a 5.9% y/y increase in September, from a 6.4% print reported in August, and remained flat in m/m terms.  The 0.2% monthly increase in housing and utility prices (primarily rental prices) was offset by a 0.3% decline in transport costs, largely owing to the 67c/l decrease in petrol price. Click here to read more.

Consumer confidence index shows resilience amongst upper-income earners (06 October 2014)
Consumer confidence retraced in 3Q14, as anticipated, as the positive impact of the expected election outcome wore off.  The largest contribution to the decline in the headline FNB/BER Consumer Confidence Index (CCI), from four points to -1, stemmed from the deterioration in household expectations on the economic outlook in a year’s time, followed by a drop in consumer expectations of their financial position a year from now. Click here to read more.

Strong performance across all SA vehicle segments (03 October 2014)
According to Naamsa, new vehicle sales data reflected a ‘remarkably strong performance’ across all sectors of the vehicle market, including a stellar recovery in the vehicle export market, which rebounded from strike action. Click here to read more.

Marginal improvement in headline PMI (02 October 2014)
Although the BER/Kagiso Purchasing Managers Index (PMI) edged into expansionary territory for the first time in five months, the new sales orders sub-index pointed to a slow pick-up in demand in September painting a benign picture for the manufacturing sector for the remainder of the year. Click here to read more.

Benign growth in household credit (01 October 2014)
Both money supply growth and growth in private sector credit slowed over August.  According to the South African Reserve Bank (SARB), growth in the broadest measure of money supply – M3 – decelerated to 6.4% y/y from 6.9% in July, remaining broadly flat over the month. Click here to read more.

Weak underlying growth momentum (29 August 2014)
Although South Africa avoided a technical recession in the second quarter of the year, the growth figures pointed to a worrying moderation in economic activity in the underlying economy.  Even after stripping out the impact of the contraction in the mining and manufacturing sectors, economic growth remained sluggish at around 1.4% q/q in seasonally-adjusted terms (saar) in 2Q14. Click here to read more.

Headline inflation eases; core inflation heads higher (21 August 2014)
Inflation appears to have peaked in June, drifting lower from 6.6% y/y in June to 6.3% y/y in July.  While the South African Reserve Bank has warned about another potential peak in headline inflation in 4Q14, we have inflation forecasts heading lower into the remainder of the year. Click here to read more.

Retail sales growth remains flat (15 August 2014)
Real retail sales volumes remained flat between June 2013 and June 2014, considerably lower than consensus expectations for a 2.1% year-on-year increase.  In month-on-month terms, sales decreased marginally by 0.4%, leaving the three-month seasonally-adjusted change subdued at -0.8%, boding ill for second quarter real GDP growth. Click here to read more.

Expected decline in Kagiso/BER PMI on strike effect (4 August 2014)
The four-week strike by the National Union of Metalworkers South Africa (NUMSA) in the metal and engineering sectors of the economy was bound to have a dampening effect on manufacturing confidence levels. Click here to read more.

Jobs growth weak outside of the public sector (4 August 2014)
Stats SA reported a further 87 000 job losses, leaving the total number of unemployed persons in South Africa at 5.2 million in 2Q14, resulting in an unemployment rate of 25.5% (up from 25.2% in the previous quarter). Click here to read more.

SARB sticks to its core mandate of price stability (18 July 2014)
After nearly a six-month pause in interest rates, the South African Reserve Bank (SARB) raised the repo rate by 25 basis points to 5.75%, in line with the forward-rate agreement market, which had been pricing in an 80% chance of a 25 basis point hike. Click here to read more.

Better-than-expected retail sales (17 July 2014)
According to Stats SA, retail sales volumes increased by 2.4% in y/y terms in May, exceeding the market expectation for a 0.7% increase. The 2.4% y/y print followed a 2.1% y/y rise in April, which had been upwardly revised from a prior reading of 1.8%. Click here to read more. 

Naamsa: Effect on exports and production could be felt if strike persists beyond two weeks (04 July 2014)
The contraction in sales growth in total vehicle sales for the industry as a whole slowed from 9.0% in May to 2.0% in the latest data for June.  Naamsa-only data for total vehicle sales showed a slightly steeper decline of 2.2% in y/y terms. Click here to read more.

Better-than-expected consumer confidence may wane in upcoming quarters (03 July 2014)
The FNB/BER Consumer Confidence Index (CCI) rebounded sharply from -6 points in 1Q14 (and -7 points in 4Q13) to 4 index points in 2Q14, the highest reading seen since 3Q11.  While the latest reading exceeds the long-term average of 2 index points, it is marginally lower than the 5-point average observed over the post-apartheid history in South Africa. Click here to read more.

Weak household credit uptake (01 July 2014)
Growth in credit in the private sector remained steady at 8.3% y/y in May, increasing by a marginal 0.5% over the past month.  The divergence between household and corporate credit growth intensified over May, with household credit growth slowing to 4.3% y/y and corporate credit remaining at a more robust 13.4% y/y. Click here to read more.

Soft retail sales momentum (23 June 2014)
Retail sales growth remained relatively soft at 1.8% in y/y terms in April, increasing from a revised 0.8% y/y in the prior reading.  While the April print came in slightly above the consensus expectation for a 1.6% rise, it should be noted that March’s figures were downwardly revised to 0.8% from 1.0% y/y. Click here to read more.

Goods inflation drives overall CPI higher (20 June 2014)
Headline consumer price inflation (CPI) surged to 6.6% in May, from 6.1% in April, slightly higher than the consensus view, but marginally below our internal forecasts.  In m/m terms, CPI increased by 0.2%, driven by a 0.4% m/m increase in goods prices. Click here to read more.

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In the media

ACM Insight magazine (December 2014)
Momentum is the tendency for stocks to exhibit similar trends to what they have demonstrated over their immediate history. Past winners therefore tend to be future winners and past losers tend to continue underperforming during consecutive periods. Click here to read more.

Foreign participation in South African bonds – being ‘underweight’ is not possible (FIA Insight) – December 2014
Increased foreign participation has been one of the notable features of the South African fixed-income landscape over the past few years. Click here to read article.

Momentum Africa clocks seven years (HedgeNews Africa) – October 2014
The Momentum Africa ex-South Africa Fund clocks a seven-year track record this month as new fund manager, Mishnah Seth, completes rebalancing the portfolio in line with her market views and investment process. Click here to read article.

Africa AM Power 50 - August 2014
The Africa AM Power 50 is our annual guide to the most influential, innovative and powerful figures in the industry. This year we have placed a greater emphasis than ever before on the portfolio managers who are directly responsible for a fund’s performance. Click here to read article.

Saving for retirement: active or passive choice? (FANews) – April 2014
In a country with a low savings rate, passive investment products offer a cost-effective and predictable investment solution. Investing in indexed products makes sense from a fee and return perspective as they provide affordable, easy access to diversified portfolios. Click here to read article

Contemplating the unknown (Momentarily) – April 2014
In contemplating the really big unknowns we are likely to face in the next ten years, I thought it wise to look back (a thought experiment if you will) before we look ahead. Go back with me to October 2003 and try to imagine whether it was possible to have prescience regarding the big issues of the ensuing decade. Click here to read article

Pre-budget: PowerFM interview with Conrad Wood – 25 February 2014
Click here to listen

Pre-budget: Taxpayers be warned (The Times) – 25 February 2014
Working South Africans are in for some nasty surprises tomorrow when Finance Minister, Pravin Gordhan, delivers his Budget speech. Click here to read more.

Contemplating the unknown (February 2014) – Funds on Friday
In contemplating the really big unknowns we are likely to face in the next ten years, I thought it wise to look back (a thought experiment if you will) before we look ahead.  Go back with me to October 2003 and try to imagine whether it was possible to have prescience regarding the big issues of the ensuing decade.  Click here to read more.

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Fund affairs

Multi-asset Mix funds (25 February 2013) - Collective Investments
In his fourth quarter newsletter last year, David Einhorn, the celebrity hedge fund manager at Greenlight Capital, asked what tools the US Central Bank and Congress would have at their disposal if the US economy slides into another recession, which he said would occur sooner or later: “When the recession comes, it is very likely that we will enter it prior to the Fed having ‘normalised’ monetary policy and we’ll have a large fiscal policy to boot. Click here to read more.

Momentum Top 25 Fund (22 August 2012) - Collective Investments
Momentum Collective Investments launched the Momentum Top 25 Fund (managed by Patrick Mathidi) at the beginning of April. The fund is a specialist large-cap equity portfolio that seeks to provide investors with high long-term capital growth. It is a high conviction stock pick fund with specific focus on company valuation and quality. Click here to read more.

Momentum Small/Mid-Cap Fund - the road less travelled - 28 August 2012
Sam Houlie, recently took over the management of our Momentum Small/Mid-Cap Fund and as a first priority, he re-positioned the fund in line with his contrarian investment philosophy. Portfolio actions resulted in the sale of approximately 20% of the fund (by value) and the source capital was used to establish new positions to meet his investment criteria. In his view, the small-and mid-cap sector has moved way ahead of fundamentals and as a consequence, the fund is now intentionally positioned more defensively, with stocks that have strong absolute return potential and that are well positioned to take advantage of future opportunities. Click here to download the foll article and gain further insight into Sam’s thinking, investment philosophy and process in getting to these decisions.

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