from the editor


Mario Draghi, pres­i­dent of the Euro­pean Cen­tral Bank (ECB), has some sober­ing thoughts for those who are caught up in the Don­ald Trump-in­spired mar­ket rally. Buoyed by prom­ises of tax cuts and mas­sive in­fras­truc­ture spend­ing, which is sup­posed to turn the US into the ma­jor driver of global growth, mar­kets took all of a day to re­cover from Trump’s unexpected vic­tory in the US presidential elec­tions in Novem­ber.

Not so fast, warned Draghi at an ECB press con­fer­ence on 8 De­cem­ber: “It’s very dif­fi­cult to as­sess what are the ef­fects of these big changes, like the rad­i­cally new ad­min­is­tra­tion – new in the way it looks at the world – in the US, or for that mat­ter even Brexit, or for that mat­ter even the out­come of the Ital­ian ref­er­en­dum a few days ago. All three events were ex­pected to have ma­jor ef­fects in the world, and in all three cases, the mar­kets, the fi­nan­cial in­ter­me­di­aries, proved much more re­silient than peo­ple had ex­pected them to be.”

That may be so, but there will be medium- to long-term con­se­quences of these de­ci­sions, Draghi said, warn­ing that they are “very, very dif­fi­cult to as­sess now”.

The mar­kets could be pric­ing in too much good news, John Briggs, head of strategy for the Amer­i­cas at NatWest Mar­kets, told the Fi­nan­cial Times. “We think the mar­ket is not pay­ing enough at­ten­tion to the strength of the dol­lar and there is a chance that this weighs on the econ­omy in the near term.”

In SA, growth is ex­pected to re­main weak, with lit­tle room for mon­e­tary or fis­cal stim­u­la­tion. (For a more optimistic take on the year ahead, read the flip side of this mag­a­zine.)

With cru­cial elec­tions com­ing up in Ger­many, France and the Nether­lands in 2017, more shocks are likely to head our way. To what ex­tent will cheap cash, pro­vided by mon­e­tary stim­u­lus from banks like the ECB, be able to con­tinue prop­ping up the mar­kets?

Mat­ter of fact

In the ar­ti­cle Turn­ing the East­ern Cape around, pub­lished in the 1 De­cem­ber edi­tion, we said the N2 Wild Coast toll road could cre­ate 540 000 jobs over a 30-year pe­riod for business and fam­i­lies along the route. In fact, a study by San­ral showed it could cre­ate up to 54 700 jobs.

In the 15 De­cem­ber is­sue’s Fund in Fo­cus, Denker Capital said the SIM Global Equity In­come Feeder Fund held a 3.42% stake in Glax­oSmithK­line Con­sumer Nige­ria. In fact, the stake is held in Glax­oSmithK­line. We re­gret the er­rors.

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