The SA Reserve Bank has cut its benchmark interest rate by the biggest margin in more than a decade as it seeks to support an already fragile economy.
By Linda van Tilburg
- The South African Reserve Bank cut its benchmark interest rate by the biggest margin in more than a decade as it seeks to support an already fragile economy that’s expected be hit hard by the coronavirus. The monetary policy committee voted to lower the repurchase rate to 5.25% from 6.25%. The MPC now projects that the economy will contract by 0.2% this year compared with a forecast of 1.2% growth given in January. There were large drops on the Johannesburg Stock Exchange again yesterday with Anglo Platinum shaving 29.5% off its value and Nedcor 26.7%. Capitec was the biggest casualty with a 38.51% drop. In a move to calm investors, Capitec released a statement forecasting a full year profit rise of up to 21% and said that only 1.1 million of its 12.6 million active customers had credit with the bank. More on this after Biznews founder Alec Hogg interviewed Kokkie Kooyman. The Rand had a rollercoaster day trading at R17.42 to the US dollar.
- MultiChoice and retailers have been benefitting from consumers digging in to weather the restrictions on movement due to the coronavirus and stocking up on essential goods with the MultiChoice stock gaining more than 10%; Pick’n Pay posted gains of 9.25%, Dischem shares rose by more than 5%, Tiger Brands by 4.39% and Clicks by more than 3%. In New York, the tech giants are back in the driver’s seat as the stock market struggles to get off the ropes with the NYFang Index which contains the tech quartet of Apple and Twitter posting gains of about 4% yesterday. Tesla share are up by more than 13% after having erased gains of nearly 120% this year.
- Trade and Industry Minister Ebrahim Patel has introduced new regulations to prevent price hikes in essential products for the next three months. Companies are not allowed to hike prices for a list of goods by more than the increases in the cost to produce the goods or hike their profit margins above average mark-ups for the next three months. The list of goods includes the products the consumers have been stockpiling including toilet, paper, hand sanitiser, facial masks, disinfectants, all-purpose cleaners, baby formula and other food essentials like cooking oil, rice, pasta, canned meats and frozen vegetables. Prices for private medical services relating to the testing of the coronavirus will also be covered by the new regulations.
- The Government is going to erect a fence at its biggest border post with Zimbabwe to prevent people infected with the coronavirus from entering the country as part of measures to contain the spread of the disease. The Department of Public Works said the 40km barrier is expected to be completed within a month. It comes as the government decided to ratchet up restrictions of movement in response to the coronavirus outbreak and ordered bars to close at night and limited the number of patrons to 50 people. Restaurants may stay open after 6pm if they don’t sell liquor. The government has also announced that they will stamp down on fake news and anyone that created or spread fake news about COVID-19 could be prosecuted. South Africa’s number of confirmed cases is relatively low at 150.
- The National Energy Regulator of South Africa (NERSA) has taken a crucial step towards allowing the government to procure emergency power and to allow the building of more privately owned power plants. NERSA issued public consultation papers after the energy minister all allowed the procurement of 2000 megawatts of emergency capacity as soon as possible and the construction of 6800 megawatts of capacity from longer term renewable power plants. The deadline for comment on the framework for the procurement of emergency power is the 14th of April and the regulator has indicated the process will be completed in 3 months. The deadline for the longer term plants which include a range of technologies from wind to battery storage and coal will close on the 7th of May and that process will be finalised after about six months.