THE DAILY BRIEF ECONOMICHEADLINES WEDNESDAY,10OCTOBER2018 - CAPRICORN ASSET MANAGEMENT

The Daily Brief

Economic Headlines                                        Wednesday, 10 October 2018

Rand holds gains as Tito Mboweni announced as finance minister
The rand held gains made ahead of President Cyril Ramaphosa's announcement on Tuesday
afternoon that former Reserve Bank Governor Tito Mboweni would be the new finance minister. The
rand was trading 0.67% stronger at R14.75 ahead of Ramaphosa's announcement, having firmed on
speculation that Mboweni would get the post. At 16:56, after the president made the
announcement, it was changing hands at R14.76 to the greenback. The currency had opened the
day at R14.84/$. In the early afternoon it weakened to briefly trade under R15/$ on a combination
of uncertainty around Nene's fate and dollar strength. In a short address Ramaphosa said that it was
a measure of Nene's character and his "commitment to the national interest" that he resigned
although he has "not been implicated in acts of wrongdoing". "This moment calls for strong, capable
and steady leadership that will unlock new opportunities as we grow and transform our economy. I
am confident that Mr Mboweni will provide that leadership." – Fin24

No escape from high fuel prices
A lot has been said about the petrol price reaching a new record of above R17 per litre and the
possibility of further increases due to rising oil prices and a weak rand. Every household has seen its
monthly fuel bill increase dramatically this year, in some cases to thousands of rand per month.
There is no real alternative other than to employ every fuel saving tip possible. Unfortunately,
electric cars are not yet a solution to the dilemma. Their disadvantages still outweigh the benefits of
never having to pay for fuel again…Reducing tax by R1 per litre will not make a huge difference to
the motorist – it will still leave petrol at an expensive R16 per litre. But government cannot afford to
lose even R1 in fuel tax. A reduction of R1 in fuel levies will reduce tax by more than R23 billion,
while National Treasury had to increase Vat to 15% in the last budget to raise a much-needed R26
billion. – Moneyweb

Tencent’s $220bn rout is breaking all kinds of records
The $220 billion rout in shares of Tencent has entered uncharted territory. Not only has the Chinese
Internet giant lost more market value than any other company worldwide this year, its 38% drop
from a closing high in January is now the deepest since Tencent’s 2004 listing in Hong Kong. The
stock has been mired in a downtrend for a record 259 calendar days and on Tuesday matched its
longest streak of consecutive losses after falling for an eighth session. It has never fared worse
relative to global technology shares. It’s a dramatic reversal for a stock that returned more than 67
000% from its initial public offering through January, by far the best performance among large-cap

companies globally during that period. While Tencent’s hugely popular online games, WeChat
messaging service and budding finance business made it a favourite of both institutional and
individual investors, sentiment has soured after the company faced an onslaught of bad news this
year. – Moneyweb

Buhari Asks Nigerian Senate to Approve $2.8 Billion Eurobond
Nigerian President Muhammadu Buhari asked lawmakers to approve the issuance of $2.8 billion of
Eurobonds. The debt will mostly be used to finance infrastructure projects and the government’s
2018 fiscal deficit, the West African nation’s Senate said on Twitter. Bank of America Merrill Lynch
analysts said last week they expect Nigeria, Africa’s top oil producer, to tap international capital
markets before the end of the year, pending the Senate’s approval. Yields on Nigeria’s $1.5 billion of
Eurobonds due in 2027 rose 1 basis points to 7.42 percent by 8:12 a.m. in Lagos, the commercial
capital. The government last issued dollar debt in February, when it sold $2.5 billion of 12- and 20-
year notes. Buhari in June signed the nation’s biggest-ever budget of 9.1 trillion naira ($25 billion) for
this year, and increased investment in roads, rail, ports and power to boost the economy. –
Bloomberg

Oil dips as IMF cuts growth outlook; eyes on hurricane
Oil prices slipped on Wednesday after the IMF lowered its global growth forecasts, but markets were
supported as Hurricane Michael moved toward Florida causing the shutdown of nearly 40 percent of
U.S. Gulf of Mexico crude production. Benchmark Brent crude LCOc1 was down 25 cents at $84.75 a
barrel by 0735 GMT after a 1.3 percent gain on Tuesday. U.S. light crude CLc1 was 25 cents lower at
$74.71. The International Monetary Fund downgraded its global economic growth forecasts for
2018 and 2019 on Tuesday, raising concerns that demand for oil products may slump as well. Trade
tensions and rising import tariffs are taking a toll on international commerce, while emerging
markets struggle with tighter financial conditions and capital outflows, the IMF said.– Reuters

Stats of the Day

Data Releases
             Local Time   Country           Indicator Name               Period

             13:00        United   States   MBA Mortgage Applications    1 Oct,   w/e
             13:00        United   States   Mortgage Market Index        1 Oct,   w/e
             13:00        United   States   MBA Purchase Index           1 Oct,   w/e
             13:00        United   States   Mortgage Refinance Index     1 Oct,   w/e
             13:00        United   States   MBA 30-Yr Mortgage Rate      1 Oct,   w/e
             14:30        United   States   PPI Final Demand YY          Sep
             14:30        United   States   PPI Final Demand MM          Sep
             14:30        United   States   PPI exFood/Energy YY         Sep
             14:30        United   States   PPI exFood/Energy MM         Sep
             14:30        United   States   PPI ex Food/Energy/Tr YY     Sep
             14:30        United   States   PPI ex Food/Energy/Tr MM     Sep
             14:55        United   States   Redbook MM                   1 Oct,   w/e
             14:55        United   States   Redbook YY                   1 Oct,   w/e
             16:00        United   States   Wholesale Invt(y), R MM      Aug
             16:00        United   States   Wholesale Sales MM           Aug
             17:00        United   States   TR IPSOS PCSI                Oct
             22:30        United   States   API weekly crude stocks      1 Oct,   w/e
             22:30        United   States   API weekly gasoline stk      1 Oct,   w/e
             22:30        United   States   API weekly dist. stocks      1 Oct,   w/e
             22:30        United   States   API weekly heating oil       1 Oct,   w/e
             22:30        United   States   API weekly crude imports     1 Oct,   w/e
             22:30        United   States   API weekly product imports   1 Oct,   w/e
             22:30        United   States   API weekly crude runs        1 Oct,   w/e
             22:30        United   States   API Cushing number           1 Oct,   w/e

                                                                             Source: Thomson Reuters

Market Overview

                  Source: Bloomberg

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