Asia

Asian markets mostly opened higher on Tuesday, building on newfound momentum after bargain hunters helped a recovery in U.S. markets in the wake of last week's sell-off.

Hong Kong's Hang Seng index was up 0.2% while Chinese shares opened higher with the blue-chip CSI 300 index up 0.41%.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.39% to 555.01.

Japan's benchmark Nikkei average, however, dropped 0.61% as telecom stocks fell after Nippon Telegraph and Telephone Corp announced a $38 billion take-private of its wireless carrier business, paving the way for price cuts in the sector.  Shares going ex-dividend was also expected to dampen market sentiment.

Australia's S&P/ASX 200 index rose 0.22%, while New Zealand's S&P/NZX 50 index edged down 0.27% after rising in early trade.

Asian markets have been buoyed by positive signs around China's economic recovery, although the coronavirus pandemic continues to wreak economic havoc globally and raise a concern about high valuations.

The poverty forecast for developing countries in East Asia and the Pacific is expected to grow just 0.9% this year — the weakest growth rate since 1967, according to the World Bank.  The bank said as many as 38 million more people could fall below the poverty line this year, including 33 million who would have escaped poverty if the Covid-19 shock didn't happen.  World Bank defined the poverty line as an income of $5.50 a day.

30 September 2020

THE PEOPLE OF SOUTH AFRICA COMES FIRST

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What Made The Headlines ...


Global Covid-19 infections have hit 33.2 million confirmed, with the death toll reaching 1 million.  In South Africa, there have been 903 new cases, taking the total reported to 671,669. Deaths have reached 16,586 (a daily increase of 188), while recoveries have climbed to 604,478 (which translates to a recovery rate of 90%), leaving the country with a balance of 50,605 active cases.

Health Minister Zweli Mkhize said: "We have now confirmed, both with the NICD and the World Health Organisation surge ream reports that we are not past the surge and that our epidiomelogical curve has demonstrated a plateau for several weeks."

SAA has warned for months that it is out of money and waiting for funding to pay the R90 million it owes to technical staff. Picketing workers have only been paid half their salaries, while managers received full pay.  The Department of Public Enterprises committed National Treasury to source R10 billion in funding for yet another bailout.

The Congress of South African Trade Unions (Cosatu) is continuing to intensify its national mobilisation efforts in the build-up to the upcoming socio-economic, nationwide strike set to take place on the 7 October 2020.

Although Eskom is now allowed to source over 11,800MW from Independent Power Producers (IPPs), Chris Yelland warned that this would not solve South Africa's problems in the short term.  "This new capacity will most probably only come on stream in three to four years' time because of the long procurement process," he said.

It seems as if President Cyril Ramaphosa is committed to his declaration: "South Africa comes first. I was not sworn in to advance the interests of a party. I was sworn in to advance the interests of the people of South Africa." He has taken action against Defence Minister Nosiviwe Mapisa-Nqakula over the incident in which an SANDF plane was used to transport an ANC delegation to Zimbabwe.  For three months, Minister Mapisa-Nqakula's salary will be paid to the Solidarity Fund, and the President ordered her to ensure that the ANC reimburses the government for the cost of the flight.

The Special Investigating Unit (SIU) has issued a summons to officials at the Gauteng department of health for them to pay back to the state an amount just below R30 million, as part of its ongoing investigation into allegations of corruption in the procurement of personal protective equipment (PPE) in the province.

South Africa and China are working on a new 10-year strategic program for cooperation. The program will focus on collaboration in areas including higher education, skills transfer, health, the digital economy, science and technology, Public Enterprise Minister Pravin Gordhan sat at an online briefing hosted by the Chinese Embassy on Monday. "We hope to sign this before the end of the year,' he said.

Teflon Trump, as the U.S. President has become known, has made headline news with a New York Times report showing that he has paid no federal income taxes or the better part of a decade and for the 2016 and 2017 tax years he paid $750 each year. By contrast, the average U.S. family was paying around $12,000 a year.  Trump seems sure to face heavy financial pressures from the enormous pile of debt he has absorbed. The Times said the President appears to be responsible for $421 million in loans, most of which will come due within four years. On top of that, a $100 million mortgage on Trump Tower in New York will come due in 2022.  Here is their share-worthy article: https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html



South Africa

Despite the dramatic fall in the number of working people, S.A.'s unemployment rate fell to 23.3% in the second quarter of 2020, amounting to 2.2 million jobs.


Moody's said their next credit review would come after Finance Minister Tito Mboweni's medium-term budget policy statement in October.  They warned that South Africa's sovereign credit rating could be pushed further into sub-investment territory. S.A.'s "exit strategy" from the stimulus measures — including the timing of any rollback and the level of coordination between monetary and fiscal authorities — will be an important question for the ratings agency, Lucie Villa, Moody's vice-president, said in a webinar on Monday.

Data from Statistics South Africa (StatsSA) showed that the annual producer price inflation (PPI) for manufacturing hit a five-month high in August. PPI rose 2.4% in August from 1.9% in July, beating market expectations of a 2.1% gain.  It was the highest producer inflation since March, boosted by prices of transport equipment, food products, tobacco products, and paper and printed products.

Alviva Holdings, one of Africa's largest providers of information and communication technology products and services, said its headline earnings per share declined by 50%, negatively impacted by the Covid-19 outbreak during the second half of the financial year.

Diversified investment holding company Remgro said yesterday that its full-year profits tumbled nearly 70% during the year to end June.

The gap between the rich and the poor widened further last year with South Africa retaining its position as the 38th richest country for the second consecutive year. The latest Allianz Global Wealth Report said the U.S. remained the wealthiest followed by Switzerland then Singapore. It said the average net financial assets per capita better illustrated the wealth divide: It was the highest at €198000 in North America and the lowest at €5160 in Eastern Europe. South Africa last year had net financial assets per capita of €7112 (R141 218), clearly edging towards the lower end of the wealth divide.

In 2019, gross financial assets jumped by 9.7% and reached €192 trillion.


Europe

European stocks on Monday had their best day since June, leading a global equity market rally driven by investors scooping up shares in beaten-down sectors as a choppy month draws to a close.

Financials led the way, reversing a sell-off last week that pushed the Stoxx banking index to its lowest level since at least the late 1990s.

The German finance minister, Olaf Scholz asked Germany to take on €96.2 billion ($112.5 billion) in new debt next year to help the country tackle the coronavirus pandemic and its economic impact.  If agreed by the Bundestag, the amount would be the second-highest sum of new debt ever in modern German history. Berlin set the record earlier this year when it allowed up to €217.8 billion in additional borrowing to help stem the economic effects of the health emergency.

In total, the 2021 budget plan calls for spending of €413.4 billion, down from this year's exceptionally high €508.5 billion — a figure that was swollen by spending on rescue packages.

The coronavirus pandemic has dealt a blow to pension systems across Europe, heaping pressure on policymakers to introduce reforms to avoid a decades-long retirement crisis, according to an influential consumer group. Significant increases in unemployment will shrink the tax revenues used to fund state pensions and reduce contributions to retirement saving schemes run by employers and individuals. At the same time, cuts to interest rates and new government-backed bond-buying programmes have reduced the income pension funds earn from their fixed-income investments.

Rapid growth in coronavirus infections has led Boris Johnson to warn that the U.K. is at a "perilous turning point" as a second wave begins to sweep the country. More stringent restrictions have been introduced to control the virus as a consequence, with measures that could last six months, which saw billions of pounds being wiped off the value of the stock market. The FTSE 100 slumped by 3.5% to below 6,000 points.

We're just over a month away from what is going to be an election for the ages.

Morgan Stanley's former 9.3% fourth-quarter growth prediction was one of the highest among major banks, according to data compiled by Bloomberg. Goldman Sachs halved its growth forecast to 3% last week, JPMorgan cut its expectation to 2.5% from 3.5% shortly after, and Bank of America dropped its forecast earlier in September to 3% from 5%.

Financial stocks were marginally outpaced by energy companies, the best performing U.S. sector for the day. Energy companies made up a far smaller part of the S&P 500 and gained after the price of Brent crude, the international benchmark, advanced 1.2% to above $42 a barrel.

President Donald Trump has repeatedly raised the possibility of divorcing the U.S. and Chinese economies. Still, various data suggest that such a "decoupling" process may be challenging as the two economies have grown more connected over the years; relying on each other's supply chain for input into goods and services consumed within their borders.

The trading relationship is an uneven one. In merchandise goods trade, the U.S. imports way more from China than it exports to the Asian country; but the reverse is seen in services trade, in which China buys more from the U.S. than the amount it sells, Bureau of Economic Analysis data show.







Those ties suffered somewhat following a tariff fight that erupted in 2018. However, bilateral trade of goods and services still totalled a substantial $636.8 billion last year.

Despite touting separation of the two countries, Trump has sought to push China to purchase more U.S. agricultural products to appease American farmers who are seen as a crucial voting bloc for him in the upcoming presidential election in November.





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