Quarterly car sales take hit from rate hikes

Vehicle sales fell 11 percent to 102 145 units in the third quarter, as fewer people took out car loans because of higher borrowing costs, the National Association of Automobile Manufacturers of SA (Naamsa) said yesterday.

“Car sales are expected to remain under pressure as a result of tight monetary conditions,” Naamsa said. The new National Credit Act cut into borrowing, it added. More…

Growth outlook dims, but not SA’s optimism

By Tonny Mafu

Cape Town – South Africa’s economic growth rate will fall to 4.5 percent next year from about 4.9 percent this year, amid slower growth in developed economies and falling domestic consumer demand, the national treasury said in its medium-term budget policy statement.

The mini-budget outlook for next year’s growth is lower than the 5.1 percent projected in February’s budget speech, although, contrary to expectations, this year’s forecast was up 0.1 percentage point from that forecast. More…

Social issues may prevent Moody’s uptick

By Gordon Bell

Johannesburg – South African public finances are sound and the financial system is healthy, while strong economic growth will continue, albeit as a slower pace.

This is the good news from Moody’s Investors Service, but the rating agency warned yesterday that political and socioeconomic risks might dampen investor sentiment and cloud prospects for a ratings upgrade.

“South Africa’s foreign exchange reserves have strengthened markedly since our last upgrade in 2005, which helps provide momentum for the foreign currency ratings,” Moody’s vice-president Kristin Lindow said in an annual country report.
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Retail boom may end with a whimper, warns study

By Tom Robbins

Cape Town – The country’s retail boom is over for now and real retail sales could fall for the first time since 1999, suggests a study by Avior Research.

While the report by the company, which provides research to asset managers, is the most negative to come from the analyst community, many agree consumers are in for a tough time until at least mid-winter next year.

Central to Avior’s forecast is the view that consumers have used rising property values to remortgage their homes to repay short-term retail debt, such as store cards, and to even possibly fund purchases.

But in a cooling housing market, consumers now have less scope to borrow against housing gains and have had to contend with more expensive debt funding costs as interest rates have climbed.
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Inflation won’t be tamed any time soon – Moody’s

By Tonny Mafu

Johannesburg – Moody’s, the international ratings agency, yesterday poured cold water on hopes that inflation would soon be tamed.

It said household spending could have more steam than initially expected, raising the possibility that inflation may remain outside the Reserve Bank’s target band of between 3 percent and 6 percent for longer than previously thought.

CPIX (consumer price index less mortgage rates) breached the central bank’s limit in April after a 44-month spell within the range. Despite interest rate increases of 350 basis points since June last year, inflation has remained above 6 percent.
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Ups and downs at the two giant banks

Standard and its Chinese suitor, ICBC, were in desperate straits in 1999. Both have since transformed
October 26, 2007

  By Ann Crotty

Johannesburg – In 1999 Standard Bank was cowed under the threat of a takeover bid from Nedcor. The offer, which was for 50.1 percent of Standard and was to be paid for in Nedcor shares, valued Standard at R30 billion. The ICBC (Industrial & Commercial Bank of China) deal announced yesterday values Standard at R184 billion.

The Nedcor attack evidently shook up management sufficiently, in what had become a dull and pedestrian bank, to see Standard resume its position as a leading blue chip in the local banking sector.
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Late payments squeeze small firms

By Tonny Mafu

Johannesburg – Delayed payments by the government and big corporations continue to stifle South Africa’s small businesses, prompting them to source often expensive loans from banks to remain in business.

This is according to Business Partners, an incubator firm for small, medium and microenterprises (SMMEs).

Jo Schwenke, the managing director of Business Partners, said that if customers of small businesses, such as government departments, parastatals and big companies, made their payments on time, there would be no need for bridging finance – money borrowed from banks and other lenders to use as working capital while waiting for payment from customers.
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Inflation won’t be tamed any time soon – Moody’s

By Tonny Mafu

Johannesburg – Moody’s, the international ratings agency, yesterday poured cold water on hopes that inflation would soon be tamed.

It said household spending could have more steam than initially expected, raising the possibility that inflation may remain outside the Reserve Bank’s target band of between 3 percent and 6 percent for longer than previously thought.

CPIX (consumer price index less mortgage rates) breached the central bank’s limit in April after a 44-month spell within the range. Despite interest rate increases of 350 basis points since June last year, inflation has remained above 6 percent.
 More…

Rand takes the market by surprise

The rand took the market by surprise yesterday, soaring to an intraday high of R6.63 to the US dollar – the highest level since May last year – before settling at R6.65 to the dollar in late afternoon trade. The currency also strengthened sharply against the euro and sterling.

Ian Cruickshanks, head of Nedbank Capital’s strategic research unit, said the sudden move could relate to corporate action by a foreign acquirer targeting Standard Bank, as there had been “huge offshore dollar sales in exchange for rands”.
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Car dealers face closure as retail sales take a dive

New vehicle dealers are under severe pressure because of a steep downturn in retail car sales which is expected to lead some to close.

Eric Scoble, the chairman of the National Automobile Dealers’ Association, said yesterday that sales figures from the National Association of Automobile Manufacturers of SA (Naamsa) created a misleading picture of market conditions.

Scoble said dealer passenger vehicle sales reported to Naamsa last month were the worst since December 2004, comprising only 23 000 units out of a total market of 32 257 passenger vehicles reported. More…