Friday, May 17, 2013

Equity Snapshot - 17 May 2013


Another rate cut? Really?: Market optimistic, but economists are sceptical. JOHANNESBURG – After a boring couple of months on the interest rate front, market speculation has recently been rife that another cut might be on the cards. The Monetary Policy Committee (MPC) is scheduled to announce its interest rate decision next week and might feel some pressure to follow in the footsteps of other central banks who have decided to loosen monetary policy. While some have also flagged the recent contraction in manufacturing output as sufficient reason for a cut, others have stressed that the negative growth was largely the result of the holidays in March this year. However, economists are sceptical about whether there is a real possibility of another rate cut and if a breather in this regard will have the desired effect.

China and the middle-income trap: How likely is a major slowdown in China & what will it mean? Growth in China is slowing. Its industrial output is falling, GDP growth has been coming in below expectations, and things are generally cooling off in the once super-hot economy. Part of this is cyclical – economies go through phases just like anything else – and of course, China has been feeling the chill emanating from the recession-riddled Eurozone. But observers fear that part of it may be secular, that China may be entering a new phase marked by slowdown and stagnation; in short, that it may be falling into the middle-income trap (MIT). The MIT occurs when a country’s growth slows and plateaus as the country reaches middle-income status. The world is littered with nations that enjoyed a period of rapid growth and saw per capita incomes rise from subsistence levels to middling levels, only to see growth sputter and incomes stagnate. Generally, countries get stuck on the technological ladder – wages are too high to qualify them as a low-cost manufacturing destination, but skills and innovation are not high enough to make the leap to a high-tech economy.

Amplats says miners report for morning shift: Despite earlier calls for a strike by some union leaders. Miners at South Africa's Anglo American Platinum(JSE:AMS) reported for work on Friday, a company spokeswoman said, despite earlier calls for a strike by some union leaders. Amplats spokeswoman Mpumi Sithole said all workers had reported for the morning shift and there had been no trouble.

Tongaat expects yearly earnings to rise: By more than 14%, JOHANNESBURG - South Africa's Tongaat Hulett said on Thursday it expected headlines earnings per share for the year to rise more than 14%, lifted in part by increased sugar production. The agri-processing company said in a trading statement sugar production rose by 9% to 1.25 million tons with major increases in Zimbabwe - the latest sign of an agricultural recovery in the country. 

Manufacturing not yet out of the doldrums: Local consumption key to growth – Manufacturing Circle. JOHANNESBURG - The basis for a sustainable manufacturing industry depends on the local market and South African producers source 80% of their input sources domestically. In addition, manufacturers consider government’s local procurement programme as being important for boosting the sector, but they say it seems little is being done by the state to meet manufacturers halfway.

Richemont chairman Rupert to take sabbatical: I just want to be the master of my own time for a while - Rupert. Cie. Financiere Richemont SA Chairman and controlling shareholder Johann Rupert will take a year off, leaving management of the world’s second-biggest luxury-goods company to a team of executives including Cartier’s former CEO.

Glencore Xstrata chairman ousted in surprise coup: John Bond was voted out at the group's first annual shareholders' meeting. Glencore Xstrata Chairman John Bond surprised investors on Thursday by announcing he had been voted out of the top job at the miner and trader at the group's first annual shareholders' meeting. Bond gave no explanation, but as the meeting began in Zug, Switzerland, he handed responsibility for chairing the gathering to former BP boss Tony Hayward, the company's senior independent director.

Bill Gates is richest man in the world once again: First time the former Microsoft boss has held the title since 2007. Microsoft co-founder Bill Gates has regained the title of world's richest person with a fortune valued at 72.7 billion dollars on Bloomberg's billionaire index, Bloomberg news service reported Thursday. It is the first time the former Microsoft chief executive has held the title since 2007. He took the title away from Mexican telecommunications billionaire Carlos Slim.

Source: 28E Capital (Pty) Ltd

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