Revenue outlook could dim further if markets reacted adversely to an awaited announcement by the US Federal Reserve, Finance Minister Pravin Gordhan warned.]]> |||
Parliament, Cape Town - The revenue outlook could dim even more if markets react adversely to an awaited announcement by the US Federal Reserve, Finance Minister Pravin Gordhan warned on Tuesday.
"In respect of the revenue outlook in relation to the current economic growth that we are experiencing,... we are today facing more difficulties than anticipated.
"(This is) partly because of the very uncertain and volatile environment that we are experiencing globally, which could become worse when the chairman of the Federal Reserve of the US addresses us," Gordhan told the National Assembly during debate on the 2013 Just don’t call him a gunrunnerAppropriation Bill.
Federal Reserve chairman Ben Bernanke is expected to indicate on Wednesday whether the US central bank will taper off its massive quantitative easing programme, which was designed to boost the recovery of the US economy.
"It is likely that if the markets don't like what he is saying, or interpret what he is saying in a particular way, that could introduce shockwaves very similar to what we experienced about two weeks ago in the financial markets around the world, so prepare ourselves for that.
"All these uncertainties actually introduce uncertainty around the revenue picture," Gordhan said.
Two weeks ago, the rand fell to a four-year low against the dollar. The US currency has strengthened in recent weeks, raising expectations that the Federal Reserve might start retreating from its bond-buying stimulus programme.
The bill putting into effect Gordhan's R1.1 trillion 2013 budget was passed after often acrimonious debate, with opposition parties criticising the performance of one department after another and refusing to support the budget allocations for many.
Rising on the finance ministry's budget, Democratic Alliance finance spokesman Tim Harris said it was not legitimate to blame the volatility of the rand and South Africa's bleak growth outlook on quantitative easing.
Harris said the DA would vote for the department's budget this year, but threatened not to do so in future if Gordhan were to bow to pressure from the ANC's left-wing allies on fiscal policy.
Gordhan dismissed the criticism on finance policy as electioneering.
"As we get closer to elections, the temptation for fabrication becomes quite strong," he said.
"The ANC, for the past 19 years, has led this country extremely well in terms of the fiscal management of this country.... There is no piece of fact that anybody can produce anywhere in South Africa that can accuse the ANC of being profligate, of being irresponsible, of not responding timeously to the events around us.
"We can't be subjecting our public to the DA model of neo-liberalism and laissez-faire, which they want to cast upon South Africa."
All opposition parties refused to support the presidency budget, in effect turning this vote into one of no confidence in President Jacob Zuma, with DA parliamentary leader Lindiwe Mazibuko saying South Africa could not afford another term of "leadership failure".
Congress of the People leader Mosiuoa Lekota said he would not vote for the state security budget in protest against the Protection of State Information Bill which is awaiting the president's signature.
Lekota said former president Nelson Mandela would never have signed the bill because it was a setback for freedom of speech. - Sapa]]>
Foodcorp said it failed to attract a single valid offer to redeem its remaining euro-denominated debt to meet the terms of a takeover.]]> |||
Johannesburg - Foodcorp, a South African food company, said it failed to attract a single valid offer to redeem its remaining euro-denominated debt to meet the terms of a takeover.
Foodcorp, which owns brands such as Glenryck canned fish and Nola mayonnaise, offered 101 percent of the face value for its 390 million-euro ($522 million) securities due March 2018 on May 17.
Yields on the bonds rose 1 basis point, or 0.01 percentage point, to 6.10 percent as of 1:13 p.m. in London, pricing the debt at 108 percent of face value.
Remgro’s Rainbow Chicken, South Africa’s largest chicken producer, paid 1 billion rand ($100 million) for 64.2 percent of Foodcorp on April 29.
The deal, supported by a 3.9 billion-rand rights offer underwritten by Remgro, broadened Rainbow’s range to include products from peanut butter to dog food.
A change of control clause related to the bonds forced Foodcorp to make the offer to bondholders.
“Foodcorp did not receive any valid tenders of notes,” the company said in a statement today.
Michael Holte Christensen, who helps manage the equivalent of $805 million in global high-yielding corporate debt at Jyske Bank A/S in Silkeborg, Denmark, said on May 17 the offer was too low.
Rainbow Chicken fell 0.7 percent to 15.35 rand as of 2:24 p.m. in Johannesburg, giving the company a market value of 9.6 billion rand. - Bloomberg News]]>
Harmony Gold said it expected to write down a portion of the carrying value of its Hidden Valley mine in Papua New Guinea.]]> |||
Johannesburg - South Africa's Harmony Gold said on Tuesday it expected to write down a portion of the carrying value of its Hidden Valley mine in Papua New Guinea because of lower gold and silver prices and poor performance.
“It should be noted that the write-down of the carrying value of Hidden Valley will reduce the net profit of the company, but will not have an impact on reported cash balances and free cash flow,” Harmony said in a statement. - Reuters]]>
The dollar rose and US and European equity markets pushed higher.]]> |||
New York - The dollar rose and US and European equity markets pushed higher on Tuesday as investors fixed their attention on the future of US monetary policy ahead of the Federal Reserve's policy meeting.
The US central bank kicks off a two-day gathering on Tuesday, with global markets across asset classes on high alert for any guidance on when and how quickly it may wind down its bond buying program.
The central bank issues its policy statement on Wednesday, which will be followed by a news conference by Chairman Ben Bernanke.
Wall Street opened little changed before extending gains about an hour into trading, while European shares edged higher.
The Fed meeting has taken on greater significance since Bernanke said in May stimulus plans could be scaled back if the US economy gains momentum, comments which have thrown a wrench in this year's equity market rally.
The Fed's policy won't show major changes after the meeting, according to Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati.
“They won't do anything in this meeting and I think the data supports that,” Salamone said.
“We remain in a holding pattern until the policy statement is released.”
The Dow Jones industrial average gained 102.97 points, or 0.68 percent, to 15,282.82.
The Standard & Poor's 500 Index rose 8.59 points, or 0.52 percent, to 1,647.63.
The Nasdaq Composite Index climbed 20.35 points, or 0.59 percent, to 3,472.48.
European shares were up 0.1 percent.
Stocks found some support in a rise in investor sentiment in Germany that suggested Europe's largest economy is on the slow road to recovery.
But it was only a brief distraction ahead of the Fed.
US equities took little direction from data that showed.
US consumer prices rose in May and a gauge of underlying price pressures showed signs of stabilization after a long decline.
That could be encouraging to Fed policymakers who would like to see stronger inflation.
But the rise in consumer prices was slightly weaker than economists had expected and weighed on US Treasuries prices, with bond investors also focused on the Fed.
Benchmark 10-year Treasuries were last down 5/32 in price to yield 2.21 percent.
Thirty-year bonds fell 6/32 in price to yield 3.37 percent.
The dollar, which should gain from any hint of an early Fed tapering, rose against most other major currencies and recovered from a recent two-month low against the Japanese yen, gaining 1.1 percent to 95.51 yen.
HSBC strategist Daragh Maher expects Bernanke to emphasize that any scaling back of Fed stimulus will depend on data.
“While this should be generally dollar bullish, if volatility rises it could see dollar/yen lose ground.”
The US economic data helped boost Brent crude above $106 a barrel as it eased some concerns over what the Fed may signal.
Brent rose 67 cents to $106.14, while US oil was up 55 cents at $98.32.
“If the Fed takes away the stimulus, it will boost the dollar and potentially push oil prices down, but a lot has been priced in already,” said Simon Wardell, analyst at Global Insight.
“The Fed will try to do it as gradually as possible to avoid a shock so the impact on oil will probably be minimal.”
In the debt markets, German government bonds fell in line with US Treasuries on expectations the Fed may signal it is moving closer to trimming its bond purchases.
Germany's ZEW business sentiment survey showed an uptick in the mood in Germany, as expected, though its impact was limited, coming a day after the Bundesbank said it saw a summer slowdown.
Elsewhere figures showed car sales in Europe plunged to the lowest level in two decades last month. - Reuters]]>
German sportswear maker Adidas forecast record sales for its soccer business in 2014.]]> |||
Herzogenaurach, Germany - German sportswear maker Adidas AG forecast record sales for its soccer business in 2014, aiming to retain market leadership in the sport ahead of US rival Nike Inc in a soccer World Cup year.
Adidas and Nike dominate a market for soccer kit - replica shirts, balls and boots - estimated to be worth around 5 billion euros ($6.7 billion) annually.
“It is a battle between us and Nike, not only in Brazil but the whole football world,” Adidas chief executive Herbert Hainer told reporters at a news conference at the company's headquarters in southern Germany.
Setting out its targets a year before the World Cup kicks off in Brazil, Adidas said sales from its soccer division would break the 2 billion euro barrier for the first time in 2014.
Sales from its soccer business surpassed 1.7 billion euros in 2012 and are expected to remain around that level this year, despite no World Cup or European championships to stimulate demand.
Adidas is official sponsor of the 2014 World Cup and will supply the match balls, referees' kit and clothing for volunteers at venues.
Nike sponsors the host nation Brazil, the five-times world champions and one of the most popular national teams around the globe.
Nike, the world's largest sportswear group, has recently agreed kit supply deals with France and England, two former World Cup winners. Adidas has contracts with World Cup holders Spain and former champions Germany and Argentina.
“Tradition is on the side of Adidas, but Nike is making more and more progress,” said Peter Rohlmann of German consultancy PR Marketing.
“They are very close together in terms of market share.”
Adidas said it expected “double-digit sales growth” in Latin America in coming years, boosted by the interest generated by the World Cup.
Chief executive Hainer played down the impact of protests in Brazil which have swept the country as it hosts the Confederations Cup, an eight-team tournament seen as a test event for the World Cup.
Such protests tend to fade once the action begins on the field, Hainer added, citing previous competitions in Germany in 2006 and South Africa in 2010.
“As soon as the World Cup starts, people are excited about football, the demonstrations are over and I believe this will happen in Brazil as well,” he added.
Hainer said Germany had benefited from hosting the World Cup, gaining new soccer stadiums and a boost for the economy.
Argentine Lionel Messi is lined up to play a prominent role in the Adidas World Cup marketing campaign.
Messi and his father have denied wrongdoing after being accused of tax fraud in Spain where he plays for Barcelona.
“We definitely will continue to work with Lionel. He's the best football player in the world and we are happy that we have him,” Hainer said. - Reuters]]>
National Union of Mineworkers (NUM) members handed a memorandum to the management and leadership of Minopex.]]> |||
Johannesburg - National Union of Mineworkers (NUM) members handed a memorandum to the management and leadership of Minopex during a march in Sunninghill, Johannesburg, on Tuesday.
“The march went well. Everything was peaceful and we had no problems,” NUM organiser Elias Mfikoe said.
“We handed over the memorandum and the company accepted it shortly after 2pm.”
Mfikoe said workers' grievances included salary discrepancies.
They also wanted the NUM to be recognised according to regions.
He said about 250 NUM members participated in the march.
Minopex operates and maintains minerals and metals processing plants, and employs more than 2000 people in South Africa, Lesotho, Botswana, Mozambique and Tanzania. - Sapa]]>
Gold fell as the dollar rose and traders took to the sidelines ahead of a Federal Reserve policy meeting they hope will give greater clarity on the outlook for US monetary policy.]]> |||
London - Gold fell on Tuesday as the dollar rose and traders took to the sidelines ahead of a Federal Reserve policy meeting they hope will give greater clarity on the outlook for US monetary policy.
The dollar rose against a basket of currencies, and equity markets held within tight ranges as uncertainty over the future of the US monetary stimulus program kept investors on edge, helping push gold prices lower.
Spot gold was down 0.8 percent at $1,373.55 an ounce at 15:43 SA time, while US gold futures for August delivery were down $10.20 an ounce at $1,372.90.
The Fed meets this week amid intense speculation that it may rein in its $85 billion-a-month bond-buying programme after firmer-than-expected economic data this year and as stock markets rallied.
The programme, part of the Fed's quantitative easing (QE) policy to stimulate US growth, has helped drive gold prices to record highs in recent years by keeping up pressure on long-term interest rates and stoking inflation fears.
Concerns that this policy may be reined in have helped knock gold prices 18 percent lower this year. Gold analysts say that move may have become overdone, however.
“Gold is trading weaker on the fear that the FOMC may reduce the volume (of quantitative easing),” Peter Fertig, a consultant at Quantitative Commodity Research, said.
“But if anything they will be scaling out gradually, there will not be an abrupt end to QE.”
He added, “There will be a point in time when the Fed is not going to provide more stimulus by buying bonds at the pace it has been. It's a question of time, (but) I don't expect it to be now,” he said.
INDIAN, CHINESE BUYERS HOLD OFF
Physical demand retreated in India and China, the top two consumers of bullion, from peak levels reached after a steep sell-off in April.
“There is not much buying interest. The sentiment right now is low,” a trader in Hong Kong said.
Another Hong Kong trader said premiums there had fallen to $2 an ounce over London spot prices, from a high of $6 last month. Hong Kong sells mainly to buyers in China.
Any signs of a significant slowdown in the Chinese market would be a big blow to bullion prices because investors expect China to offset slower buying from India.
Demand in India has eased since the government increased the import duty on bullion by a third in an effort to reduce its current account deficit.
Among other precious metals, silver was down 0.2 percent at $21.78 an ounce, while spot platinum dipped by 0.2 percent to $1,427.24 an ounce and spot palladium fell 1.3 percent to $703.47 an ounce.
Platinum group metals, which are used in chiefly catalytic converters, came under pressure after data showed that European car sales plunged to their lowest in two decades for the month of May, further eroding manufacturers' hopes of a recovery this year. - Reuters]]>
US stocks are opening higher on Wall Street after the pace of home construction picked up in May.]]> |||
New York - US stocks are opening higher on Wall Street after the pace of home construction picked up in May, the latest encouraging sign from the housing market.
The Dow Jones industrial average rose 45 points, or 0.3 percent, to 15,229 in the first few minutes of trading Tuesday.
The Standard & Poor's 500 index was up four points, or 0.3 percent, at 1,643. Nine of the 10 industry groups in the index rose.
The Nasdaq composite was up 13 points, or 0.4 percent, at 3,465.
Hormel Foods fell $1.47, or 4 percent, to $39.21 after the company cut its profit forecast for the year, citing weak sales and higher costs.
Investors are hopeful that the Federal Reserve will keep up its economic stimulus program.
The bank starts a two-day policy meeting Tuesday. - Sapa-AP]]>
A bill seeking to change Brazil's 46-year-old mining code proposes maintaining the country's existing division of mining royalties.]]> |||
Brasilia - A bill seeking to change Brazil's 46-year-old mining code proposes maintaining the country's existing division of mining royalties, a federal congressman who is part of the government's ruling coalition said on Tuesday.
The bill suggests royalties be divided 65 percent for municipalities affected by mining, 23 percent for producing states and 12 percent for the federal government, said Henrique Fontana after meeting with Mines and Energy Minister Edison Lobão on Tuesday.
Lobão has said recently that the government was considering a wider division of royalties to include payments to non-producing states. - Reuters]]>
Consumers' credit health has deteriorated in the past quarter, the National Credit Regulator (NCR) said.]]> |||
Johannesburg - Consumers' credit health has deteriorated in the past quarter, the National Credit Regulator (NCR) said on Tuesday.
The number of consumers classified in good standing decreased by 76,000, to 10.55 million between the quarter ended June 2013 and the previous quarter, it said in a statement.
The number of impaired accounts increased from 17.52m to 18.31m compared to the previous quarter, an increase of 790,000.
Consumers with an impaired credit record equalled 47.5 percent of total credit active consumers.
There were currently 20.08m credit-active consumers.
NCR CEO Nomsa Motshegare said the increase in the levels of impairment was of concern.
She encouraged consumers to monitor their credit health and to approach credit providers and debt counsellors for help. - Sapa]]>