‘Time has come to hike US rates’
Caught up in time
A FORMER Group of Seven central banker says the time has come for the Federal Reserve to lead a co-ordinated global rate increase. David Dodge, who ran the Bank of Canada between 2001 and 2008, argues the best medicine for the world’s economy would be higher interest rates, combined with new government stimulus through spending or tax cuts.
Low interest rates “may actually be retarding growth” as firms felt no hurry to borrow and invest, bank lending became less profitable and consumers needed to set aside more money for retirement, Dodge said. The consensus in place since the 1980s around balanced budgets and central bank stimulus was no longer working, he said.
Interest-rate cuts and asset purchases by central banks from Washington to Frankfurt had pushed yields on trillions of dollars of bonds below zero, but have failed to restore growth to levels seen before the global financial crisis. Budget tightening in many countries is adding to the drag in growth.
Practically, the Fed could take the lead by announcing a fixed timetable for raising its benchmark rate to 2 percent, he said. “Such a policy would facilitate the better functioning of financial markets and reduce uncertainty.” – Bloomberg got a boost.
Developing nation stock valuations may soon become attractive to some investors as a down trend that started in September is taking the price-earnings ratio of the MSCI index closer to its threeyear average. The gauge trades at 12 times the projected earnings of its members, compared with a mean of 11.3. It trades at a 25 percent discount to the MSCI World Index of developed market stocks, compared with 29 percent at the start of the year.
“Emerging markets should do reasonably well next year,” said Mayo. “The asset class is still under-owned as most people are positioned negatively or completely out of it. Valuations are looking reasonable and earnings growth is slowly beginning to recover.” NATIONAL Treasury has said there are no conclusive figures to date on the financial affordability and social impact on procuring new nuclear plants for South Africa.
In a response to a parliamentary question released yesterday, Finance Minister Pravin Gordhan said studies released by the Department of Energy last week were based on limited information. “These reports only contain preliminary observations, which were reached from limited information. Extensive work is still required before substantive conclusions are reached,” he replied to a question from DA finance spokesman knows how to get products into the market.
“My projections are that in the next four years my company would be making a turnover of about R120 million. I am actually looking at other Swiss brands to bring into South Africa.”
Sefate said that after he has consolidated the rolling out of the watches, he would look at diversifying his product range with the inclusion of sunglasses and bags and children’s products. He would make 40% of the company available for investors who share in his vision. “I believe in partnerships, but not just for the sake of it. I want to partner with people who would add value into growing the business.”
Four tips:
1. Understand what niche your start-up has. After conceptualising your business idea, you need to study the market and see how viable the idea is. It’s critical to put your energies David Maynier.
“A full cost-benefit analysis must be conducted which must include a comprehensive social and economic impact assessment before the feasibility, affordability and procurement strategy can be properly assessed by the Treasury.” in researching the market outlook before pumping money into the project. 2. Passion comes first. You will never see good returns on your business if you don’t have passion for what you do. It takes a lot of personal sacrifices to grow a business into a success. 3. Have your long-term investment lenses on. Understand that the start-up capital you put into the business initially won’t magically bear profits immediately, but will take some time. You must be able to hang in there when you experience what you perceive to be failures because in the end there will be returns on your investment to encourage you. 4. Be in control of the macro factors of your business. Don’t delegate too much managerial control of a start-up business. You would need to pour your time, talents and energies into the business until it becomes the success you want it to be.
Gordhan added that the Office of the Chief Procurement Officer held discussions with the Department of Energy about the feasibility of the nuclear expansion programme last year.
The Treasury planned to engage further with the department once it was able to submit more substantive documentation, he said. – ANA THE rand is expected to weaken more than 5% over the coming year in anticipation of a credit rating downgrade, further infighting in the ruling ANC party and the prospect of faster US interest rate rises.
The ANC is due to pick a successor next December to President Jacob Zuma – who has survived calls for his resignation – as the party prepares for national elections in 2019.
A Reuters poll taken this week of 37 economists and foreign exchange strategists forecast the rand would weaken to R14.75 from current levels of R14/dollar, similar to predictions made last month.
The most bullish forecaster said the rand would break through the psychological level of R13/dollar in 12 months. The most bearish predicted R17.50.
“As it stands, I am still a rand bear, as I can’t see economic growth picking up meaningfully enough to avoid a credit rating downgrade to junk status,” said Christopher Shiells, senior emerging markets analyst at Informa Global Markets in London.
The rand may also come under pressure from the threat of more Fed rate increases in 2017 than previously expected, as a result of president-elect Donald Trump’s reflationary tax cut plans.
Rising inflation caused by higher oil prices after Opec decided to reduce output poses another risk.
The rand is up almost 10% this year, making it one of the top three performers in a list of 20 emerging market currencies. But that contrasts with its economic performance and near-term prospects.
“Our fundamental outlook for South Africa growth remains soft, and rising US yields will see investors exit South Africa and seek safer returns in other emerging markets,” Shiells said. – Reuters PASSENGER Rail Agency of South Africa (Prasa) said on Friday that it had begun a three-phased trial run in Pretoria of its new trains as part of the New Rolling Stock Acquisition Programme.
The new trains will replace the Metrorail trains presently in use.
The development comes after the agency provisionally accepted the first train from Gibela Transport Company, a joint venture between Alstom, Ubumbano Rail and New Africa Rail.
Gibela won a R51 billion contract to supply Prasa with 600 new passanger trains, with the first 20 trains imported from Brazil, and 580 to be built at a plant under construction in Dunnottar, on the East Rand. Gibela also signed a 19year maintenance and technical support programme with Prasa.
Prasa said the testing and commissioning process of the train had progressed well in the past six months, with no major technical issues recorded.
In a statement, Prasa spokseperson Nana Zenani the first train would travel between Pienaarspoort Station in Mamelodi and Rissik Station in Hatfield daily until January 16, 2017.
She said this would be to test Prasa’s operational plan which would determine oper-