Daily Commentary - 14 January 2019

Merchant West Business Finance

Merchant West Capital Markets

USD/ZAR 13.9376 | EUR/ZAR 15.9903 | GBP/ZAR 17.8815

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JHB: (011) 305-9500 | PTA (012) 742-8600 | CPT (021) 552-7007 

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Market Data: 

14 Jan  EC Industrial Production

15 Jan SA  Mining Production | EC Trade Balance | US PPI Data 

16 Jan SA Retail Sales | US MBA Mortage Applications ; Total Net TIC Flows

17 Jan EC CPI Data | US Housing Starts ; Initial Jobless Claims | SA SARB Intrest rate announcement 

18 Jan EC ECB Current Account | US Industrial Production ; University of Michigan Sentiment

Market Commentary: 

Local front - At 08h18, the rand traded at 13.9175 per dollar, 0.6 percent weaker than its New York close on Friday of 13.8350.The Rand traded slightly weaker this morning due to much weaker-than-expected Chinese exports and imports figures for December," analysts at NKC African Economics said in a note. South Africa's rand fell in early trade on Monday amid subdued risk appetite after a shock contraction in Chinese exports pointed to deepening cracks in the world's second-biggest economy, raising fears of a sharper slowdown in global growth.

NERSA – The Southern African Faith Communities' Environment Institute (Safcei), along with community leaders and other organisations, will present their arguments to the National Energy Regulator (Nersa), opposing Eskom's proposed tariff increases today. Eskom has requested an electricity price hike of 15% for 2019, with a projected overall increase of 45% to 2021.Nersa has asked for public input at hearings around the country from today before making a decision. Safcei has objected to Eskom's application, saying it was based on an inflated demand projection, which is out of touch with consumption trends. And Eskom's focus seems to be on managing its debt, rather than curbing escalating operational costs caused by poor management.

Nationwide load shedding was still a reality for South Africans, highlighting once again the urgent need for restructuring and improved management of Eskom, she added. The Cape Chamber of Commerce and Industry has said Eskom reached a stage where its problems can no longer be solved by price increases and drastic action was now required. “In fact price increases will make things worse and reduce Eskom's chances of recovery," Chamber president Janine Myburgh said. She said Nersa has already granted an increase of 4.41% and when one added this to 15% one is already looking at an increase of nearly 20% in year one.

"The next 15% increase will be applied to a tariff that has already been increased and the third 15% increase will apply to a tariff that has already been increased twice, so the total increase over three years will be nearly 59% and not the 45% that has been reported. The Western Cape public hearings take place today from 9am to 5pm at the Southern Sun Cape Sun in the city centre.

International Data front:

China's December exports unexpectedly fell 4.4 percent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world's second-largest economy. For the month, imports also unexpectedly contracted, falling 7.6 percent, the biggest decline since July 2016. That left the country with a trade surplus of $57.06 billion for the month, the General Administration of Customs said, compared with analysts' expectations for a surplus of $51.53 billion, up from $44.71 billion in November.

Analysts polled by Reuters had expected December shipments from the world's largest exporter to have risen 3.0 percent, slowing from 5.4 percent in November. Import growth had been expected to pick up slightly to 5.0 percent, after cooling to 3.0 percent in the previous month.The world's largest trading nation got off to a strong start in 2018, but pressure on the economy started to build later in the year as a trade dispute with the United States escalated and global demand began to cool.U.S. tariffs on Chinese goods have put additional strains on China's already cooling economy, prompting policymakers in Beijing to announce a series of growth-boosting measures to avert the risk of a sharper slowdown.

Our Range for today: R13.8000 - R14.0500