Sasol fell the most in almost six years as oil’s slump to a five-year low put pressure on spending plans.]]> |||
Johannesburg - Sasol, the South African fuel producer, fell the most in almost six years as oil’s slump to a five-year low put pressure on spending plans.
The Johannesburg-based company, which manufactures synthetic fuels from coal and gas, finalised plans last month to build an $8.1 billion (R89 billion) plant in the US that will convert natural gas into plastics and other chemicals.
Sasol fell as much as 8.3 percent, the most since December 2008, and traded 7.9 percent lower at 463.50 rand by 12:23 pm in the city, with trading volume 1.9 times the three-month daily average.
Brent crude extended its decline from a four-year low after the Organization of Petroleum Exporting Countries decided to keep production steady at yesterday’s meeting in Vienna, resisting calls from Venezuela to cut output.
Sasol’s revenue is linked to the dollar price of oil.
The drop in crude is the key factor pulling Sasol’s stock lower, Mohamed Kharva, a research analyst for Nedbank Capital, said in an e-mail response to questions.
“It’s all a serious concern as they have a huge capex program ahead.”
Sasol fell 10 percent in October and is headed for a 16 percent decline this month.
Yields on dollar bonds due November 2022 rose two basis points to 4.41 percent, the highest on a closing basis since June 12.
Brent crude was little changed at $72.60 a barrel in London, bringing its decrease this year to 34 percent.
“The presently lower oil price does not pose a risk for investors in Sasol’s bond,” acting chief financial officer Paul Victor said in a November 24 e-mailed response to questions.
The fuel producer is considering bringing back an oil-hedging program after years of suspending it because shareholders wanted exposure to crude-price movements, he said.
Sasol needs to raise as much as $7 billion to build the ethane cracker in Lake Charles, Louisiana.
The company received offers from a syndicate of international banks for a dollar-based term-loan facility and is entering into binding commitments, Victor said.
Sasol expects to reach financial close by mid-December, he said.
While the crude selloff is weighing on Sasol’s stock, moves to diversify operations with US projects will be beneficial, Sean Ungerer, a Johannesburg-based analyst at Avior Research (Pty) Ltd, who rates the stock outperform, said.
The chemical facility and a proposed gas-to-liquids plant at the site, which the company will decide on in 2016, are set to gain from a jump in natural gas output from shale formations in North America.
Capital spending over the next three years will increase earnings with less reliance on fuel production in South Africa, “which is good,” Ungerer said in an e-mailed response to questions. - Bloomberg News]]>
South Africa’s trade deficit widened to the highest in at least four years.]]> |||
Johannesburg - South Africa’s trade deficit widened to the highest in at least four years as oil importers increased purchases to benefit from lower prices.
The trade gap swelled to 21.3 billion rand from 2.9 billion rand in September, the Pretoria-based South African Revenue Service said in an e-mailed statement today.
The median estimate of 16 economists surveyed by Bloomberg was for a shortfall of 6.3 billion rand.
The oil price has dropped 37 percent since June, leading to lower inflation forecasts and prompting importers to step up their purchases.
The volume of South African crude purchases rose 72 percent in October from the month before, revenue service data shows.
“Relatively sizable trade deficits are likely to remain a feature in the coming quarters,” Kamilla Kaplan, an economist at Investec in Johannesburg, said in an e-mailed note to clients before the data was released.
The trade shortfall so far this year widened to 95.11 billion rand compared with 73.08 billion rand for the same period in 2013, the revenue service said.
Imports surged by 17.8 percent to 110.32 billion rand as purchases of mineral products, which include oil, rose by 7.16 billion rand, or 33.5 percent.
Machinery and electronics purchases advanced 14.9 percent, while imports of vehicles and transport equipment rose 24 percent.
Exports decreased by 1.8 percent to 89 billion rand in October as shipments of precious metals and stones fell by 2.12 billion rand, or 13.6 percent, and vegetable products dropped by 38 percent.
The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.
The revenue service revised its data in November last year to include trade with Botswana, Lesotho, Namibia and Swaziland. - Bloomberg News]]>
South Africa must realign its interest rates with emerging-market peers’ over time.]]> |||
Cape Town - South Africa must realign its interest rates with emerging-market peers’ over time, even as an improved inflation outlook has given the central bank more short-term flexibility, Deputy Governor Daniel Mminele said.
“We embarked on a gradual, data-dependent, policy normalisation process at the beginning of this year, which will continue,” Mminele said in copy of a speech delivered in Johannesburg today.
“More recent developments on the inflation front have been encouraging and resulted in an improved headline inflation forecast, which gave the Monetary Policy Committee some flexibility in the short term.”
Plunging international oil prices have helped keep inflation within the central bank’s 3 percent to 6 percent target range for the past two months.
The bank kept its policy rate on hold November 20 and cut the forecast for average consumer-price growth for next year to 5.3 percent from 5.7 percent.
The bank expects the economy to grow 1.4 percent this year, the slowest pace since a 2009 recession.
While the normalisation of interest rates in the US suggests South Africa should also raise borrowing costs, doing so carries the risk of weakening the economy, according to Mminele.
Africa’s second-biggest economy is constrained by labor strikes, power-supply shortages, slowing consumer demand and the rising cost of inputs, he said.
“The combination of an uncomfortably high current-account and fiscal deficits requires a pragmatic and balanced policy response that will contribute to a more sustainable growth path,” he said.
“Falling commodity prices and weak economic conditions in the country’s major trading partners also add to this subdued outlook.” - Bloomberg News]]>
The traditionalists don't like it, but the “Black Friday” shopping frenzy is as much a part of the Thanksgiving holiday in the United States as turkey and pumpkin pie.]]> |||
Leesburg - The traditionalists don't like it, but the “Black Friday” shopping frenzy is as much a part of the Thanksgiving holiday in the United States as turkey and pumpkin pie.
And it's only Thursday.
Americans will spend tens of billions of dollars over the four-day holiday and there was certainly no messing about at Leesburg Corner, a Virginia outlet centre only a short drive from the US capital Washington.
There was hardly time for the roast turkey and stuffing to settle when most shops opened there on Thursday, Thanksgiving Day, for a 28-hour bonanza of breathless consumerism that was to stretch overnight and drag on nonstop until 10:00 pm Friday.
After a tentative start, many shops were packed by midnight:
nearly 100 people queued to get into Kate Spade New York as the clock ticked into Black Friday and the cold night air dropped a degree or two further.
Meanwhile they had been waiting at the door of Coach before it even opened.
Likewise at J. Crew and Sunglass Hut.
Hide and Miho, a couple originally from Tokyo but living locally, snapped up two winter coats within the first hour from DKNY.
“We got 50 percent off, but with another 20 percent off on top of that. The coats are one for each of us because here is pretty cold,” said Hide, clutching three bags in one hand.
The long Thanksgiving weekend is the kickoff to the US holiday shopping season, and Black Friday has long been considered the critical day that turns retailers' books from red to black.
But there has been criticism of those retailers that throw their doors open on Thanksgiving instead of actually waiting for Black Friday.
Don't the store workers deserve a day off to spend with their families too?
“They don't have to work. I guess they do it for the money. They are not being forced here,” said Henri Brown, 17, who along with his 15-year-old brother Will was among the first in.
“And they might enjoy the rush of people,” added Henri, who forked out over $130 (R1 432) in the first hour and proclaimed himself happy with his early purchases: two jackets - a dark blue one he was already wearing - sunglasses and trousers.
Vera Luo, a 19-year-old from China studying in Washington, came armed with a suitcase she was ready to fill to bursting with new acquisitions that she said would be more expensive in China.
She and two friends paid $60 for a taxi from the US capital and they were in it for the long haul.
“I have no idea where my friends are or when I will find them,” said the economics student, clasping a directory of the more than 100 stores in the complex.
“So far I have only bought lens solution, but I have a budget of $500 and I want to buy a bag from Coach.
“I don't know how long we will be here. Maybe all night.”
Mamadou Niass, 48, a cyber-security engineer originally from Senegal, declared himself something of an old hand in the art of the post-Thanksgiving splurge.
“It's not the cheapest time in the year. After Christmas is cheaper, but I came today because there are more options - nothing is left after Christmas,” he said sagely.
He too was through the doors early but was taking a more tactical approach, refusing to jump right into the spending bonanza.
“I am well-prepared and have a list of four brands I want -
Columbia, Tommy Hilfiger, Calvin Klein and Ralph Lauren - and I will get,” he said firmly.
Jeanette, a local who gave her age as “104,” was another refusing to get carried away by the discounts of more than 50 percent.
Taking a breather on a bench while her daughter and granddaughter did the running about, she had scouted a Michael Kors purse online before moving in for the kill for just over $100.
“I did not want to pay the high price before but it was on a pretty big discount,” she said with a glint in her eye, rubbing her cheeks to stave off the cold. - Sapa-AFP]]>
The petrol price is set to fall by 69 cents a litre on Wednesday, December 3.]]> |||
Johannesburg - The petrol price is set to fall by 69 cents a litre on Wednesday, December 3.
The diesel price is set to fall by about 54 cents a litre at the same time, the department of energy announced.
“The main contributing factor to the fuel price decreases is the continual drop in the crude oil prices, which fell to about $80 (R883) per barrel, during the period under review (31 October 2014 to 27 November 2014),” the department added.
The wholesale price of illuminating paraffin will fall by 49.30 cents a litre and the the single maximum national retail price of illuminating paraffin will fall by 66 cents a litre.
The maximum retail price of LPGas will drop by 125 cents a kilogramme.
The department also announced that the petrol margins, which is adjusted on an annual basis in December, had increased from 198.9 cents a litre in the previous year to 215.4 cents a litre this year.
“The overall margins adjustment increases the petrol price by 12.3 cents per litre after taking into account the 4.2 cents per litre salary adjustment for petrol attendants that was included in the petrol price in September 2014,” the department added. - Staff reporter]]>
Eskom will institute rolling black-outs at the weekend to augment its water and diesel reserves, it said.]]> |||
Johannesburg - Eskom will institute rolling black-outs at the weekend to augment its water and diesel reserves, it said on Friday.
“The power system is extremely constrained today and into the weekend, which will necessitate the use of open cycle gas turbines for most of today,” Eskom said in statement.
Brazilian President Dilma Rousseff named pro-market bank executive Joaquim Levy to be her new finance minister.]]> |||
Brasilia - Brazilian President Dilma Rousseff named pro-market bank executive Joaquim Levy to be her new finance minister Thursday as her government looks to steer the economy out of recession.
Levy, a University of Chicago-trained economist, is a popular choice in the financial world, where Rousseff's management of the world's seventh-largest economy has been widely attacked.
At a press conference where the president's new economic team was announced - with central bank chief Alexandre Tombini keeping his job and economist Nelson Barbosa taking over the planning ministry - Levy vowed to whip the government's books into shape by boosting the primary surplus.
“We're going to work with a primary surplus target of 1.2 percent of GDP in 2015, while for 2016 and 2017 the (target) will be no less than two percent,” he said.
“This target is fundamental to reactivate growth.”
A primary surplus means the government is spending less than its overall revenue, excluding interest payments on its debt.
Brazil formerly hewed to a target of 3.1 percent of GDP, but that was slashed to 1.9 percent in 2013.
As of September, the government had only saved 0.61 percent of GDP this year.
Levy, 53, was previously chief executive officer of Bradesco Asset Management (Bram), part of Brazil's second-largest private bank.
He has also worked with the International Monetary Fund and the European Central Bank.
Nicknamed “Scissorhands” for his steely budgetary management, he was described by Brazilian newspaper Folha de Sao Paulo as “addicted to work, frank almost to the point of rudeness” and “as stubborn as Dilma,” a former leftist guerrilla known for her toughness.
Levy takes over the finance ministry from Guido Mantega, in the post for eight years.
“He is a big name. He is an excellent name. I see him as austere, rigorous. This could enable us to send out a signal that the finance ministry is embarking on fiscal adjustments” to win back the confidence of the markets, TAG Investments economist Andre Leite told AFP.
Levy served as treasury secretary under Rousseff's predecessor and mentor Luiz Inacio Lula da Silva, a former union leader who saw him as underscoring his own market credentials.
“His trajectory, including at the heart of the first Lula government, inspires confidence,” said Margarita Gutierrez, professor of macroeconomics at Rio University.
“He is a technician... a credible person who will win over the confidence of the markets,” Gutierrez told AFP.
Lula - who remains widely popular for presiding over strong economic growth during his eight-year administration, and is reportedly considering a new presidential run in four years - was instrumental in Rousseff's choice of a new treasury team, according to Brazilian media reports.
Rousseff is deeply unpopular with the business community and markets, not least owing to heavy government intervention in economic policy.
She narrowly won re-election last month for a new four-year term despite presiding over a recession in the first half of the year.
Moreover, her reshuffle comes as her government is mired in a huge corruption scandal at state-owned oil giant Petrobras that has already led to the arrests of a clutch of top businessmen amid claims that dozens of politicians, chiefly Rousseff allies, received massive kickbacks on contracts.
Like Levy, Tombini, the central bank chief, is considered close to financiers but came in for criticism during Rousseff's first term for too easily ceding to government pressure.
Tombini, 50, vowed Thursday to tackle inflation, which has hovered stubbornly over the central bank's target ceiling of 6.5 percent.
“We will not be complacent on inflation,” he told journalists.
Barbosa, 45, rounds out the new economic team as minister of planning, a post seen as close to the presidency.
A former deputy finance minister, he quit his previous post last year after reputedly clashing with Mantega.
Other cabinet posts including industry and agriculture are likely to be filled later, probably next month.
Rousseff is reportedly considering for the industry portfolio senator and businessman Armando Monteiro Neto, who formerly chaired the influential National Confederation of Industry.
Brazilian industry is currently in crisis amid sagging investment and poor productivity and due to contract by more than two percent this year.
Despite the naming of the pro-market economic team, the country's stocks closed down on Thursday.
Sao Paulo's benchmark Ibovespa index fell 0.68 percent to 54 721 points.
The real lost 0.91 percent to close at 2.53 to the dollar. - Sapa-AFP]]>
The European Commission has given France, Italy and Belgium until March to fix their budgets or risk humiliating penalties for breaking tough eurozone spending rules.]]> |||
Brussels - The European Commission on Friday gave France, Italy and Belgium until March to fix their budgets or risk humiliating penalties for breaking tough eurozone spending rules.
“We will decide in early March whether any further steps are necessary” said Economic Affairs Commissioner Pierre Moscovici, referring to new EU powers over euro government budgets.
France in particular had made “limited progress”, the commission said, referring to the fact that Paris is set for a deficit of 4.3 percent of GDP in 2015, way above the EU.
Four other countries - Spain, Malta, Austria and Portugal - were also at lesser risk of meeting the rules imposed after the eurozone debt crisis.
The Commission, the EU's executive branch, was delivering official opinions on euro government budget plans for 2015 under those new powers.
New European Commission chief Jean-Claude Juncker said in an interview with several European newspapers earlier that he had decided to give France, Italy and Belgium more time to make reforms.
“I made a choice not to sanction because that would have been easy,” he said. - Sapa-AFP]]>
Japan released a lacklustre string of economic data including a slowing inflation rate that dealt another blow to Tokyo's bid to conquer years of falling prices and tepid growth.]]> |||
Tokyo - Japan released a lacklustre string of economic data Friday including a slowing inflation rate that dealt another blow to Tokyo's bid to conquer years of falling prices and tepid growth.
The figures come after Prime Minister Shinzo Abe called a snap election and delayed a sales tax hike set for next year as an earlier levy hike helped push the world's number three economy into recession.
Japanese core consumer inflation came in at 2.9 percent in October from a year earlier, matching market forecasts but slowing from 3.0 percent in September.
Prices rose from a year ago largely because Tokyo raised sales tax from 5.0 percent to 8.0 percent on April 1, driving up the cost of goods which sparked a dive in spending.
Adjusted for the tax increase, the nationwide core consumer-price index rose 0.9 percent from a year earlier in October, after climbing 1.0 percent in the previous month, according to Dow Jones Newswires.
The figure is the lowest in a year, and comes as the Bank of Japan's ambitious 2.0 percent inflation target - which it initially aimed to hit in 2015 - looks increasingly out of reach.
Meanwhile, factory production in October edged up a better-than-expected 0.2 percent on-month, rising for the second straight month and beating market expectations of a 0.6 percent fall.
“It is a positive set of data that hints at hopes for future recovery in production,” SMBC Nikko Securities said in a note.
The unemployment rate slipped to 3.5 percent from 3.6 percent.
But “despite the tight labour market, inflation continues to moderate,” said Marcel Thieliant from Capital Economics.
“Price pressure should moderate further in the near-term, as the recent plunge in crude oil prices has yet to be reflected in the cost of energy imports,” he added.
And “business surveys point to stagnant industrial output at best”.
Spending data was mixed with retail sales up 1.4 percent in October, but household spending fell 4.0 percent on-year, marking the seventh consecutive month of decline.
Japan's economy shrank between July and September, the second consecutive quarterly contraction, in the wake of an April sales tax rise that was designed to help pay down one of the world's largest public debt mountains.
The levy hike delivered a body blow to Abe's efforts to rev up growth, just as the long-laggard economy appeared to be turning a corner.
The weaker-than-expected GDP figures convinced Abe to put off another sales tax hike, due in 2015, and call a snap election that he described as a referendum on his policies, dubbed “Abenomics” - although observers said it was a strategic move to fend off party rivals ahead of a leadership vote next year. - Sapa-AFP]]>
German retail sales, a closely watched measure of household confidence, rebounded in October.]]> |||
Frankfurt - German retail sales, a closely watched measure of household confidence, rebounded in October, following a sharp drop the previous month, official data showed on Friday.
German retailers' sales rose by 1.9 percent in October compared with September, the federal statistics office Destatis said in a statement.
In September, retail sales had slumped by 2.8 percent.
On a 12-month basis, business also increased, rising by 1.7 in October compared with the same month last year, the statisticians calculated.
Retail sales data are subsequent to frequent revision. - Sapa-AFP]]>