South Africa’s rand headed for its biggest weekly slide since 2015 and bonds plunged, after the firing on Thursday of finance minister Pravin Gordhan raised concerns about the nation’s fiscal path and its investment-grade credit rating.
The rand dropped 1.3 percent to 13.4548 per US dollar as of 8:31am yesterday in Johannesburg, the lowest in seven weeks.
The currency was falling for a fifth day, the longest losing streak since August last year.
Photo: AP
Benchmark 10-year government bonds tumbled the most in seven months, sending the yield soaring by 42 basis points to 8.93 percent.
The rand was one of the top three emerging-market currencies last year and early this year, but politics is again casting a cloud over the nation’s assets.
Gordhan had fended off a downgrade in South Africa’s rating to junk, and his commitment to curb spending and government debt had endeared him to investors.
He clashed with South African President Jacob Zuma over the affordability of building nuclear power plants and the management of state-owned companies.
“Market reaction to the Cabinet reshuffle and what looks to have been a clean sweep of the Treasury top team is going to be a significant negative,” Razia Khan, chief Africa economist at Standard Chartered PLC, said in an e-mail. “Given past volatility in the rand when a Cabinet reshuffle was even suggested, the expectation is that the impact may be more pronounced now.”
Zuma replaced Gordhan with Minister of Home Affairs Malusi Gigaba, the presidency said in a statement yesterday.
African National Congress (ANC) lawmaker Sfiso Buthelezi took over from Gordhan’s deputy, Mcebisi Jonas.
A group of the nation’s leading chief executives said that Gordhan’s dismissal would have severe consequences for the economy and was a setback to the work done to avoid a credit ratings downgrade.
South Africa’s Banking Association said that changing the finance minister and deputy finance minister raised “alarming concerns” over fiscal discipline.
ANC General Secretary Gwede Mantashe also said in a radio interview that the process followed to axe Gordhan and eight other ministers made him “jittery and uncomfortable.”
Moreover, ANC ally the South African Communist Party said that the firing of Gordhan risked triggering the looting of the Treasury.
The rand was heading for a 7.6 percent loss for the week — the worst such performance since the last time Zuma rocked markets by firing his finance minister.
Back in December 2015, it was Nhlanhla Nene’s ouster that hurt confidence — an episode that ended with Zuma bringing back the respected Gordhan to office.
Politics aside, the generally positive environment for emerging markets — and synchronous pickup in global economic growth — should favor South Africa, with its mining assets.
Its currency enjoyed a 12.6 percent jump against the US dollar last year — behind only Brazil’s real and Russia’s ruble among emerging markets, according to data compiled by Bloomberg.
“The annoying, frustrating thing from the South Africa perspective is that you don’t want political worries now, because things are trending up, things are picking up,” Moz Afzal, global chief investment officer at EFG Asset Management, said in an interview in Singapore.
“South Africa is pretty much in the penalty box” for investors now, he said.
Zuma’s office said the new ministers and deputy ministers were to be sworn in at 4pm GMT yesterday.
Additional reporting by Reuters
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained