Mobius: Global economy looks good

REF : BUSINESS REPORT :

Emerging markets expert Mark Mobius has adopted an upbeat tone on the outlook for the global economy, despite headlines depicting doom and gloom on an almost daily basis.

“From a mid- to long-term perspective, I believe the global economic situation continues to look very good for a number of reasons,” he said in response to an online query whether there would be a recession globally or in emerging markets.

Many emerging markets have continued to grow at a rapid pace, he said, and growth was not expected to slow down too much over the next decade, although the percentage changes could decelerate when the GDP numbers get bigger.

“We believe the situation in Europe can be worked out and there will likely be considerable reform in European countries such as cuts in government spending and measures taken to stimulate business by lowering taxes and reducing bureaucratic burdens. We expect the same could happen in the US and Japan, as those countries and the entire developed world are learning that one way to stimulate growth is to allow business and private enterprise to grow, particularly the small- and medium-size businesses.

Although the move to these policies will likely take some time, “we already see the signs of potential change.”

But to Mobius, the European debt situation does not seem as serious as the US debt crisis, both in terms of scale and the possible impact on the global economy. “As such, I believe the world's focus should really be on the US debt crisis.” - I-Net Bridge

Rand gains as risk aversion ebbs

Good Start to week !!

Johannesburg - The rand gained more than 2.3% against the dollar on Monday, the best performance in a basket of 20 emerging market currencies monitored by Reuters, as the currency tracked recovering global markets.The government has said South Africa's economy will not escape unscathed from the eurozone debt crisis, but Finance Minister Pravin Gordhan said in a statement released on Monday continued exchange control liberalisation would encourage greater two-way demand for the rand, mitigating its volatility.The currency was at R8.34 to the greenback in midday trade after earlier touching a near-week high of R8.3290.It was off last week's low of 8.61, the weakest it has been since mid-May 2009, as investors offloaded assets seen as risky on worries eurozone leaders are failing to get a handle on the region's debt woes."After last week's risk aversion, the market is grabbing at any headlines that may offer some positive thoughts - as we saw with the IMF/Italy news," said Anisha Arora, emerging market analyst at 4CAST, adding the moves were based on thin trading volumes.The rand tracked a rally by the euro on a media report of an International Monetary Fund aid package for Italy which was, however, later quashed by the global lender."Liquidity is playing a big part. Across the emerging region liquidity is thin, and hence while dollar/rand moves reflect the market's current sentiments, thin liquidity is also exaggerating rand relief," Arora said.The dollar had taken a beating overnight as European sentiment improved ahead of a summit of eurozone finance ministers on Tuesday, said Brigid Taylor, head of institutional sales at Nedbank."US Treasuries and the dollar have retreated as equities, oil, gold and risk look better this morning," Taylor said.

Mugabe: Firms must cede 51% or go

Do we need to wory in SA !!!

Read below what is happening across our borders !!

Per FIN 24
"Harare - Zimbabwean President Robert Mugabe has told foreign firms to leave the country if they do not cede majority shares to local blacks, state media reported on Thursday.
"This is our policy. We do not hide it. We want empowerment of our people. Those who do not want, we say go now, if not yesterday," Mugabe said, the state-run Herald newspaper reported.
"The wealth must be exploited in the interest of our people."
Mugabe was speaking at a function where  Anglo American owned Unki mine gave 10% of its shares to the community in the mining town of Shurugwi, about 300km south of the capital Harare.
Unki mine also donated $10m to a trust fund, The Herald said.
All foreign companies in Zimbabwe are required to cede 51% of their shares to local blacks under a law that has been criticised by investors at a time when the country is looking for foreign direct investment.
Most companies missed the September deadline to submit their empowerment plans but discussions are still under way between the government and several foreign firms.
The indigenisation programme is at the centre of a dispute between Mugabe and Prime Minister Morgan Thangeri , who formed a coalition government more than two years ago.
Tsvangirai has said the indigenisation drive will drive away foreign investment."

Rand fragile, bonds weak

PER FIN 24

"Johannesburg - Yields on South African 15-year government bonds hit a seven-month high on Thursday as investors shifted to short-term safe-haven debt amid fears of a worsening EU credit crisis, while the rand firmed but looked vulnerable against the dollar.
The yield on 15-year benchmark jumped to 8.73%, while that on the 4-year bond rose to just above 7% - a two-month high.
The trigger was an unsuccessful German auction on Wednesday that drove investors to safe haven bonds regardless of their smaller yield, fearing the debt crisis might engulf the whole euro region.
Slightly higher-than-expected domestic inflation numbers on Wednesday also hit local bonds.
“The failed German auction just put risk-off, and with CPI printing a bit too high yesterday, rate cuts are definitely off the table and that puts pressure on the short end,” said Steve Arnold, a bond trader for Investec.
Consumer inflation hit the top end of the central bank’s 3% - 6% target on Wednesday. Dealers that were long on shorter-dated paper in anticipation of reduced rates would have sold off as the market repriced interest rate expectations.
Economists expect a slight increase in October's producer price inflation year-on-year, due at 09:30 GMT.
The rand was at R8.555 against the dollar at 06:50 GMT, threatening to test Wednesday's 2-1/2 year low of R8.61.
The rand is expected to breach that level if more bad news emerges from Europe. Its next support is seen around R9.00, a level it last hit in April 2009."

South African Consumer inflation higher than expected

PER FIN 24.com

Johannesburg - South Africa’s targeted consumer inflation quickened faster than expected to 6.0% year-on-year (y/y) in October from 5.7% in September, Statistics South Africa said on Wednesday. On a month-on-month (m/m) basis, inflation also accelerated slightly to 0.5% from 0.4% in September. Economists surveyed by Reuters expected the consumer price index to quicken to 5.9% on a y/y basis and slow to 0.35% m/m. Nedbank economist Carmen Altenkirch said inflation was expected to continue to rise. "Higher food and administered prices will remain the main drivers of inflation. The rand will be the wild card over the coming months. "If a credible plan is not found to resolve the European debt crisis, the rand could fall steeply as investors seek the security of so-called safe haven assets," she said.She said the 6% rise will not cause the Reserve Bank undue concern in the short term. "However, the bank will watch for signs that it is feeding through into higher wage demands and into more generalised inflationary pressures."

Chinese media says US ignoring debt bomb'

PER FIN 24.com - Good Read !!

"Beijing - The United States has ignored a “ticking debt bomb” in admitting defeat in reining in the country’s ballooning debt, Chinese state media said on Tuesday, criticising US legislators for neglecting their duty to the world. On Monday, Republicans and Democrats on a 12-member congressional “super committee” said they were too divided to tackle trillion-dollar budget deficits and a national debt that is roughly equal to the U.S. economy. China’s official Xinhua news agency, in an English-language commentary, blamed the “miscarriage” on political wrangling ahead of a US election season, and said it would overshadow flimsy market confidence around the world. “America’s nonsensical domestic political wrestling” has proved its inability to “step up and shoulder its responsibility” to help spur sustainable and balanced growth in a bearish world economy, the news agency said. “Washington’s political elites ... are obligated to muster the courage to defuse the ticking debt bomb and start to show the world they have the wisdom and determination not to further jeopardize the fragile global economic recovery,” Xinhua said. Such commentaries in state media do not represent official policy of China’s ruling Communist Party but provide insight into government thinking. US lawmakers’ failure to agree on $1.2 trillion in deficit reduction sets up a year of uncertainty on taxes and spending that could further rattle investors already shaken over euro zone debt woes. The US Congress is set to deliver those budget savings through automatic cuts to defense and domestic programmes, but some Republicans have vowed to prevent them from hitting the military. Obama said he would veto any effort to do so. “US politicians have never shied from lecturing other countries about global responsibility, and now it is high time they showed a sense of true global leadership,” Xinhua said. "

Business urges rethink on secrecy bill

PER FIN 24.com

"Business Unity South Africa (Busa) on Tuesday urged the government "even at this late stage" to reconsider the "public interest" dimension of the protection of information bill. It said this was to allay fears that transparency and accountability in South African public affairs would be greatly weakened by the exclusion of a"public interest" clause. "As economic performance and good governance are closely bound up with each other, Busa supports the need for transparent government and supporting institutions," the business representative body said."In particular it is widely recognised that corruption is a serious threat to the achievement of South Africa's socioeconomic goals and that the free flow of information is an essential part of combating it. "The recent Global Competitiveness Report of the World Economic Forum listed corruption as one of the top four most problematic factors for doing business in South Africa. "In view of the joint commitment by business and government to address the challenge of corruption - which ultimately undermines growth, employment and poverty alleviation - Busa appeals to government to subject the new draft legislation to a 'public interest' test. "Busa believes that such an amendment will go a long way to meeting the serious concerns that have been raised," Busa said. "

Branson does it again - Virgin Money to Buy Northern Rock for 747 Million Pounds

While Global Banks are cutting acquisitions Virgin Money takes the step !!

Read re Bloomberg :

"Nov. 17 (Bloom berg) -- Billionaire Richard Brandon's Virgin Money Holdings U.K. Ltd. is to buy Northern Rock Pc for 747 million pounds ($1.2 billion), four years after it suffered the first run on a British bank in more than a century.

The government will also receive 50 million pounds in cash within six months, 150 million pounds of Tier 1 capital notes and as much as a further 80 million pounds in cash in the next five years subject to a profitable initial public offering, U.K. Financial Investments said in a statement today. That would bring the total to as much as 1.03 billion pounds.

The sale is the first by the government since it bailed out four British lenders including Lloyd Banking Group Plc and Royal Bank of Scotland Group Plc following the 2008 credit crisis. Chancellor of the Exchequer George Osborne, seeking to plug the budget deficit, said today the sale is the first step to reducing the government’s holdings in the industry.

"The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks," Osborne said in an e-mailed statement. "It represents value for money, will increase choice on the high street for customers, and safeguards jobs in the North East."

Virgin Money pledged to move its headquarters to Newcastle, Northern Rock’s base, and not to impose any compulsory redundancies in the three years following the purchase. It will maintain the same number of branches. The bank has cut about 2,300 jobs since nationalization, reducing total staff numbers to about 4,000.

New Competitor

In January 2010, Northern Rock Plc, the consumer bank, separated from Northern Rock Asset Management Plc, which is closed to new customers. At the same time, the government injected 1.4 billion pounds of capital into the unit.

U.S. private-equity firm JC Flowers & Co. and NBNK Investments Plc, run by Peter Levene, also submitted bids for the bank which the U.K. government took over in February 2008.

The sale "creates a new retail banking competitor with four million customers, bringing additional choice to the U.K. market and securing jobs," said Keith Morgan, head of Wholly Owned Investments at UKFI, the government agency managing its bank stakes. "The deal returns Northern Rock to the private sector and maximizes value for taxpayers."

Gold sector upbeat on investor demand

Gold sector upbeat on investor demand: Troubled markets will fuel the surge in investment demand for gold, even as record prices force a slump in the jewellery market.

70% of Experts; lack confidence in economy dismal

Experts' confidence in economy dismal: Seventy percent of international experts have a pessimistic outlook on the global economy, according to a new survey conducted by the WEF.

JSE lifted by sentiment on Europe

JSE lifted by sentiment on Europe: The JSE reversed its morning losses by noon on Wednesday as sentiment surrounding the eurozone, and Italy in particular, improved.

OBAMA : No quick fix for Europe Troubles

PER FIN 24.COM

"Canberra - US President Barack Obama on Wednesday said he was deeply concerned about the eurozone crisis and market turmoil would continue until Europe has a concrete plan to deal with its sovereign debt woes.
Obama's comments added to a chorus of non-European policymakers urging greater action to deal with the two-year-old crisis, and came as equity markets fell in response to a sell-off in eurozone bond markets.
"Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are going to continue to see the kinds of market turmoil we saw," Obama told a news conference in the Australian capital of Canberra.
Asian shares fell on Wednesday and the euro slipped to its lowest levels in a month against the dollar and the yen.
Investors have been spooked by signs the crisis is spreading from heavily indebted Greece and Italy to the region's core nations, with yield spreads on Austrian, Belgian and French 10-year bonds over Germany Bunds hitting euro-era highs on Tuesday.
Obama said that whilst there had been progress in putting together unity governments in Italy and Greece, Europe still faced a "problem of political will" rather than a technical problem.
"We're going to continue to advise European leaders on what options we think would meet the threshold where markets would settle down. It is going to require some tough decisions on their part," he said.
"Ultimately, what they are going to need is a firewall that sends a clear signal - we stand behind the European project, we stand behind the euro."
Canada's Finance Minister Jim Flaherty, speaking earlier on Wednesday in Japan, urged European leaders to put "meat on the bones" of plans to stem the contagion.
"Until European countries build firewalls for their financial system, I think we will continue to see market volatility," he said. "Some of us are frustrated by the failure of clear and decisive action in Europe."
China's central bank also voiced its concern, saying in its quarterly monetary policy report posted on its website that the European debt crisis was a prime risk to the global economy.
"The sovereign debt problem in the eurozone will cause continuous turbulence in financial markets, and, if the crisis spreads to core member countries, it may cause global systematic risks," the report said.
Bank of Japan Governor Masaaki Shirakawa told a news conference there were signs the European crisis was starting to affect emerging economies through trade and other channels.
"Dollar funding at European banks has also worsened and there are signs of dollar assets being squeezed, or so-called deleveraging," he said "

Rand weakens on eurozone concerns

Per : @fin24

"Johannesburg - The rand weakened in midday trade, off 1%, and in line with the single currency as fears over the state of the eurozone continued to drive sentiment.

At 11:52 local time, the rand was bid at 8.0859 to the dollar from its previous close of 7.9998. It was bid at 10.9455 to the euro from 10.9031 before, and at 12.8201 against sterling from 12.7169 previously.

The euro was at $1.3541 from $1.3623 previously.

A local dealer said: "We are seeing a similar play to yesterday with renewed concerns over the eurozone. We all know that this is not going to blow away any time soon so expect the rand to fluctuate accordingly."

He put resistance against the dollar at 8.12-8.13.

Standard Bank analysts said in a morning note that the rand had fallen victim to the eurozone crisis.

"The rand weakened sharply yesterday as risk aversion returned. The yield demanded on Italian bonds rose to a eurozone high at an auction yesterday."

Clearly, investors remained concerned about Italy's ability to get its debt under control despite the recent change in this country's leadership.

"Earlier in the day, the rand had firmed after Japan's encouraging GDP data; this economy has returned to growth for the first time in four quarters. However, this rally was short-lived."

Standard Bank said while the rand might enjoy further bouts of strength into year-end, events in Europe were still calling the shots.

"We therefore believe that the rand will weaken to our year-end target of R8.20/USD."

Meanwhile Dow Jones Newswires noted scepticism from Commerzbank. "There is some GDP data as well as the ZEW economic expectations data due for publication in Europe today. Disappointing results might make it more difficult to contain the debt crisis and as a result might put further strain on the markets while positive surprises are unlikely to change the picture."

Germany's ZEW was expected to show that investors and analysts became less optimistic in November, with the current conditions index seen falling to 32.0 from October's 38.4. While this was significantly off the recent peak of 91.5 in May, it was still in positive territory, said Rabobank.

In the US, retail sales, producer price index and Empire State manufacturing were expected at 13:30 GMT, while business inventories were due out at 15:00 GMT. German GDP rose 0.5% in the third quarter, compared with the second quarter, in line with estimates. Meanwhile, French GDP expanded 0.4% from the second quarter, also as expected. "


STEVEN:
If one looks at above it is good as it shielded our market against the negative Europe Markets most down 1.5% and shaky.

The rand's fairer value in my understanding should be at about 8.15 to the $.

It seem to flitz back and forward between 7.88 & 8.15 in a two week bracket.
Until the euro crisis is sorted we in for the sideways movement !!

Hold on, it has to settle soon. The indicators are very Bullish which is good.

Eskom Secures more green energy funding

Per FIN 24.com :

"Power utility Eskom signed a loan for about R1.9bn that will finance the building of South Africa’s largest solar energy and wind power generation projects.

Signing the guarantee, Finance Minister Pravin Gordhan said South Africa had “a huge comparative advantage” when it came to solar power generation.

Public Enterprises Minister Malusi Gigaba said the loan was an indication that there was “great investor confidence in South Africa".

The 40-year loan, signed in Pretoria, will help finance the building of a 100 megawatt solar power plant near Upington and the 100 MW Sere wind farm near Vredendal in the Western Cape.

The 200 MW capacity of the two power plants could generate enough electricity to power 200 000 homes.

Eskom chief executive Brian Dames said the wind farm would be completed by 2013 and the the solar farm a year later in 2014.

Repayments on the loan will start in 10 years. It is expected to be paid off over the following 30 years at an interest rate of 0.25 (CORR) percent annually on the amounts dispersed.

The loan was approved by the World Bank on October 27 and comes from its clean technology fund.

Eskom has already received more than R700m from the African Development Bank for the two projects, which will be the largest  in South Africa.

The loans are being guaranteed by the South African government.

It is hoped that each project will reduce South Africa’s carbon emissions by five million tonnes a year. "


A good read, seems like going greener is the way to look at things good start !!

Taking the Eish out of doing a VAT Application with SARS.

All business's who provide a Vatable Service of over R1 000 000 per Anum need to register for VAT.

Also importers who import goods into SA and want to claim back the VAT on the goods imported need to apply to be a VAT vendor to claim the input VAT.

Remember VAT on imports is not only charged at 14% input & can be greater depending on the goods imported.

So to benefit from that one should register.

The application process is quite involved and one should get a person who deals with this to handle it for you. SARS have made the process very transparent and involved to ensure not fraud & corruption.

It will be Money well spent to get it done correctly.

Before doing the application the entity must be registered for Income Tax.

Below find a list of what is required for the various entities :

• Individual Copy of the identity document of the individual
• Copy of the identity documents of the 2 most senior members / directors / shareholders / trustees
• Partnership Copy of the identity documents of the 2 most senior partners of the partnership
• Close Corporation / Company / Trust :         Copy of certificate of incorporation
• Association not for Gain / Welfare Copy of constitution / Organisation / Club : Copy of Constitution
• Letter of Authority : If Application is presented by registered Tax Practioner
• Copies of bank statements for the past three months but not older than one month from application
• Copy of financial information listed as source in part four to determine value of tax able supplies      (no cashflow projections will be accepted)
• Recent copy of the Business Municipal account
• Recent copy of the Residential Municipal account of individual, partner or representative vendor
• Company / Trust fund VAT 12 1( Application for category E) if tax period is selected to be category E due to the main activity

Documents submitted with all applications :

• Cancelled Cheque of original letter from Banker
• Copy of ID or passport of Rep Taxpayer
• Business Municipal Account or Residential Municipal Account of Rep Tax payer for other entities.
• Copies of the bank statement not older then 3 months
• Copy of Financial info to show vatable supplies.

The important issue is :

Registration for VAT is area restricted and therefore you will be required to present yourself in person to the Branch office where the business is situated for validation of information. Only applications which is presented in person by the individual / legal representative vendor / authorised
registered tax practitioner will be accepted. All other applications will be rejected.


Please note all the above or one will have problems with the registration.
One will then have problems as the documents will be out of date and one will have to start the process again from scratch.

Need help contact me :

Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005

Mobile :+27 83 943 1858

Facsimile : 0866 712 498
E-mail : steven@global.co.za

Further to my story on Oppenheimers I read this !!

I came across this article on fin 24.com


A good read from a knowledgeable South African.

I can't dismiss this, unlikely but far from Impossible !!

"A senior South African business figure totally dismissed concerns about the nationalisation of mines in South Africa on Thursday, soon after the ANC suspended a key proponent of the idea.

Well-known mining executive Boddy Godsell said the odds of the mines being nationalised were as remote as those of the Tea Party in the United States being able to abolish the US Federal Reserve.

"The youth league of the ANC has developed some unrealistic and unimplementable answers to some absolutely vital questions," said Godsell, the former chief executive of AngloGold Ashanti and a key member of South Africa's National Planning Commission.

The ANC on Thursday suspended youth wing leader JU JU, one of the leading proponents of the mine nationalisation idea, for five years, accusing him of causing a rift within the party.

"The centre of gravity in the ANC is not there... To do it with compensation, you'd be talking about trillions of dollars, which the South African government doesn't have," said Godsell.

"And to do it without compensation, you need to amend our Bill of Rights, for which you need a 75% majority in the South African parliament, and I can see absolutely no chance of that majority being achieved."

South Africa is one of the world's top platinum and gold producers and Malema's calls for nationalisation of the mines to reduce poverty and inequality have rattled investors both within and outside Africa's largest economy.

Godsell said the extent of poverty, unemployment and inequality in South Africa is unconscionable, but the answers being put forward by Malema and his supporters are untenable.

"It is not possible to build a properly cohesive society with these levels of economic exclusion, so that something needs to be done, to me, is absolutely clear," said Godsell, who nonetheless remains optimistic about the growth prospects of both South Africa and the whole continent.

Godsell noted that for the last decade-and-a-half Africa has recorded the highest continental growth rate in the world, admittedly from a low base. This should only improve, helped by mining, infrastructure spending and investment in a still small energy sector.

"In the next decade, I'd imagine that African growth rates as a whole are going to be 2 percentage points higher than developed country growth rates. And in the better countries in Africa... growth rates will be as much as 4 percentage points above average growth rates in America, Europe or Japan," he said.

"The burgeoning middle class in Africa is also going to be an important driver of demand. Investment follows demand - it seldom anticipates it."

Highlighting details from a report to be released by South Africa's planning commission on Friday, Godsell said the country is taking the necessary action to curb rampant unemployment.

REF : FIN 24



"In the long term, what South Africa needs over the next 20 years is growth at about 5%, and it could then reduce its unemployment rate from about 25% now to 6% by 2030," he said.

Read more

SA stocks, rand cheer Malema suspension

SA stocks, rand cheer Malema suspension: The JSE extended gains and the rand rose after news of the suspension of youth league leader Julius Malema, who has unnerved investors with his drive to nationalise mines.

SA's labour productivity at 40-year low

" Labour productivity fell to its lowest level in 40 years in October while there was no significant change in employment, says the latest Adcorp Employment Index.

"While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, South Africa's labour productivity fell to its lowest level in 40 years," Adcorp said.

Labour productivity growth - a leading indicator of job creation - had been negative throughout 2011.

"This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output," said Adcorp labour market analyst Loane Sharp.

The index for October shows employment dropped slightly in the mining (-7.8 percent), construction (-7.0 percent) and manufacturing (-4.5 percent) sectors on an annual basis.

These losses were countered by job increases in wholesale and retail trade (4.4 percent) and financial services (three percent).

"Reflecting good underlying conditions in the consumer sectors, employment of clerks (+3.3 percent) and service workers (+2.7 percent) grew steadily, as did domestic work (+5.8 percent)."

For the first time this year, government job creation was essentially static, Sharp said.

Labour productivity was at its lowest level since the early 1970s.

"... One of the problems with the assessment of labour productivity in South Africa, is that it is measured according to 'output per worker' thus attributing all output to workers."

Sharp said it would be more accurate to consider capital equipment, technology, land, and other production factors in determining productivity.

Labour productivity growth in 2011 was negative, at minus one percent.

"This may well explain why, when real GDP rose by 6.6 percent after the 2008/9 global financial crisis, employment rose a meagre 2.6 percent," Sharp said.

"While GDP figures for the third quarter of 2011 are not yet available, we expect them to confirm the worrying declining labour productivity growth trend in this country."

Sharp said labour productivity is a critical indicator of employment.

"When adding workers yields greater output (ie when labour's value-added is positive), employers have an incentive to employ more workers," he said.

Adcorp was not expecting a sustained increase in employment until at least the second half of next year. "


REF : FIN24.COM

Shares drop as Italy nears brink

Shares drop as Italy nears brink: Asian stocks fell about 3% after soaring Italian borrowing costs stoked fears that the country's debt crisis will overwhelm its financial defences.


Singapore - Asian stocks fell around 3% on Thursday after soaring Italian borrowing costs stoked fears that the debt crisis in the euro zone's third biggest economy will overwhelm its financial defences, raising the risk of a break-up of the currency area.
The euro was steady, after suffering its biggest daily drop in 15 months on Wednesday, while industrial commodities such as copper and oil softened on worries of renewed recession. European shares were set to extend the previous day's losses.
Asian credit spreads blew out as the deepening crisis in Europe sapped investor appetite for risk, while safe haven assets such as Japanese government bonds were in demand.
"Whatever they come up with, it doesn't avoid a European recession," said Su-Lin Ong, senior economist at RBC Capital Markets in Sydney.
"The question now is just how deep it will be and whether this is going to bleed over into the banking system, because that is much more significant."


Finance sector hammered
Tokyo's Nikkei share average fell 2.9%, while MSCI's broadest index of Asia Pacific shares outside Japan lost 3.5%, with the financial and industrial sectors hammered hardest.
Hong Kong's Hang Seng Index, the Asian market that has tended to be most susceptible to European developments in recent months, was the biggest regional loser, falling 4.5% as banks such as HSBC led losses.
Financial spreadbetters expected Britain's FTSE 100 to open down 1.5%, while Germany's DAX and France's CAC-40 were called down 1.7%.
Italy has, for the time being, replaced Greece as the biggest source of concern in Europe's two-year-old debt crisis.
Italian 10-year bond yields rose above 7% on Wednesday, a level most market economists consider unsustainable for financing debt of more than €2 trillion.
A pledge by Italian Prime Minister Silvio Berlusconi to stand down failed to reassure bond markets that Rome has the will to bring its debts under control, and moves by two major clearing houses to raise the level of collateral needed for holders of Italian debt pushed the country near breaking point.
European and US stocks fell steeply on Wednesday in response, with Wall Street shares losing more than 3%. S&P 500 futures traded in Asia were up slightly on Thursday.

Too big to bail
Ireland and Portugal were both forced to seek aid soon after their 10-year bond yields topped 7%, but a rescue for Italy would be on a different scale and Europe's bailout fund is widely considered inadequate for the task.
The European Central Bank (ECB), considered the only institution capable of repelling the bond market attacks, bought Italian bonds in substantial amounts on Wednesday, but is reluctant to go further to force down yields.
"The markets were basically in a panic yesterday and the only thing that can give the euro at least a temporary respite is quick action from the ECB to lower Italian yields," said Koji Fukaya, chief currency strategist at Credit Suisse in Tokyo.
While many outside Europe are calling on the ECB to take a more active role, as other major central banks do, in acting as lender of last resort, Germany remains implacably opposed to what it views as a threat to the central bank's independence.
In a sign of the depth of fear gripping European capitals, EU sources told Reuters that French and German officials had held discussions about a eurozone split.
The single currency was steady around $1.3540, after tumbling around 2% on Wednesday.
The dollar was also steady against a basket of currencies, after surging in the previous session as investors scurried for safety, while yields on 10-year Japanese government bonds fell 1 basis point to 0.965%.
In Asian credit markets, spreads widened around 13 basis points on the Asia ex-Japan iTraxx investment grade index, a gauge of risk appetite.
Concerns about flagging demand knocked London Metal Exchange copper down 2.4%. US crude oil edged down to $95.70 a barrel, while Brent crude dipped a touch to around $112.26.
"We've moved from a low-growth scenario to one where there is a real threat of recession in the eurozone, and that's weighing on oil markets," said Ric Spooner, chief market analyst at CMC Markets in Sydney

Ref : FIN 24.com

Moody’s downgrades SA rating - negative

This Article I read from FIN24.com is so well written and covers the full story of the reasons for the downgrade there is nothing further I can add.
I have quoted this story:

Enjoy !!

"Ratings agency Moody’s downgraded the outlook on South Africa’s ratings on Wednesday due to worries that political pressure from unions and black voters wanting greater economic redress for the ills of apartheid could erode the country’s finances.

Moody’s put South Africa’s A3 rating on negative from stable and said there was “growing risk that the political commitment to low budget deficits and the ability to keep within current debt targets could be undermined by popular pressures”.

In its three-year fiscal policy framework unveiled last month, the Treasury said the budget deficit for this year would be higher than previously anticipated at 5.5 percent while weak growth would result in lower revenues.

The rand extended its losses after the outlook downgrade, falling more than two percent to a session low of 7.9720 against the dollar.
Government bonds also weakened, with the yield on the 2015 bond up 10 basis points to 6.47 percent while that on the 2026 note climbed 11.5 basis points to 8.295 percent.

South Africa’s fiscal accounts were in surplus for two years before the recession in 2009 but swung back into deficit as the government spent more to counter the effects of a global slowdown.

More than a million people lost jobs in the recession, and millions of the poor are becoming increasingly disillusioned with the ANC government , raising the risk of social instability.

Investors unsettled

Moody’s said the ANC’s “unwillingness to definitively reject demands from certain segments of the political spectrum for more activist policy interventions was harmful to South Africa’s economic prospects”.

Investors have been unsettled for two years by talk from the ANC’s youth wing to nationalise mines. The ANC has said nationalisation is not government policy but has not dismissed it out of hand.
Absa Capital said  a ratings downgrade was unlikely to ensue unless the political noise became a reality.

“Calls for a greater state involvement in the economy and for a larger push on redistribution are being made very loudly from some parts of the ANC sphere, but it remains far from clear as to what changes in broad policy, if any, might be agreed in the course of 2012,” it said in a note.

“We do not believe that a ratings -- rather than outlook -- downgrade is likely until more clarity on the outcomes of these policy debates is delivered.” "


REF: Fin 24.com 9/11/11

Why are the Oppenheimers selling De Beers interest & they leaving the ship (SA) ??

After reading up on this matter & listening to Mr Oppenheimer speaking about this on my Favourite financial show "MONEY WEB" on Friday I have other idea's

Diamond price was at it's highest a few months ago past 2008 price. July 2011

Now it has come down considerably since then.

Mr O said that this deal was done with Anglo's in the last 3 & 1/2 weeks ago.

The value was not based on prior values.

Anglo's have tried to purchase the family interest on a few occasion's.

"Nicky Oppenheimer, the De Beers chairperson who also represents the Oppenheimer family interests, said the decision to sell was tough."

How can a decision on this magnitude be made in 3 & 1/2 weeks

That for me was an indication that things are not what they seem.

Fin 24.com reports very interestingly:

" “The sudden decision by the Oppenheimer family to sell its 40% stake in De Beers to diversified global miner Anglo American $5.1bn (R40bn) has raised questions about the impact of nationalisation talk on investment.

Eskom chief economist Mandla Maleka said: “Anglo American has for years been unsuccessful in its attempt to buy the stake from the Oppenheimers.

One wonders whether the Oppenheimers are selling the stake due to commercial reasons or if there was pressure coming from certain quarters, like the nationalisation debate.” ”

The company has been run by the family directly for over 80 years.

Sir Ernest , Harry O and  Nicky O.

Between them De Beers was built into a global diamond empire that currently sells about a third of the world’s rough diamonds.

This has even caught the National Union of Mineworkers (Num) off guard,they are scrambling to meet with Mr Oppenheimer on why his family was pulling out.

Num has issues with the family on Social Responsibility over the years and this to them makes it even worse.

The family divesting shows a lack of confidence in the local mining industry considering they played a big role in developing the industry.

Even Num feel that "Nationalisation issues" are the order of the day.

I feel that, ANCYL & running of the country may be the reasons.

The Family have been over the last five years reducing interests in Anglo's which was also started by Sir Ernest & JP Morgan. Left 1.9%

Per MD of the family investment company E Oppenheimer & Son Group the family has “no intention at this stage” of further reducing its holding,

This needs to be seen.

If the money is not directed back into this country in one large investment then it will have no effect on the currency according to the IDC.

If it comes slowly it will not have any effect on the rand.

I think that this action shows the chickens are not coming home to roost & If these people who have always backed & I feel still do to a certain respect one must sit up & think seriously !!

Euro Heavy Weights test Greece’s Membership

European leaders for the first time raised the prospect of the euro area splintering, choosing to treat Greece’s December referendum on the terms of a bailout package as an in-or-out vote on the debt-stricken nation’s future in the currency union.


Led by Germany and France, Europe’s economic and political anchors, the euro’s guardians yesterday cut off financial aid for Greece until a vote they said would be on Dec. 4 or Dec. 5 determines whether it deserves a fresh batch of loans needed to stave off default. Greece’s Finance Minister Evangelos Venizelos said the bailout should be implemented without delay and that his nation’s euro membership can’t depend on a referendum.


"The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?" German Chancellor Angela Merkel told reporters after crisis talks hours before a Group of 20 summit set to begin today in Cannes, France. French President Nicolas Sarkozy said Prime Minister George Papandreou’s government won’t get a "single cent" of assistance if voters reject the plan.


The hardball tactics open the door for a nation to leave the currency bloc that at its setup in 1999 capped Europe’s progression from war to prosperity and was declared "irrevocable" by its founding fathers. Polls show most Greeks object to the austerity required for aid, yet more than seven in 10 favor remaining in the euro, a survey last week of 1,009 people published in To Vima newspaper showed.

Unilateral Decision


Papandreou triggered the confrontation with this week’s unexpected, unilateral decision to hold a poll on the additional budget cuts demanded as conditions for a second aid package. His finance chief said in an e-mailed statement that "internal political balances and the future of individuals and political parties of this country is not what matters. What matters is to save and recover the country through the only doable process which is included in the decision of Oct. 26."


"Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt," Venizelos. "This acquis by the Greek people cannot depend on a referendum."

Greece’s Nov. 1 announcement, which was designed to force the opposition to back the fiscal cuts, sent Europe’s stocks, currency and bonds tumbling. It came less than a week after leaders worked through the night in Brussels to establish a new plan to help Greece pay its bills, ring-fence Italy and recapitalize banks.


Until the ballot, an already delayed aid instalment of 8 billion euros ($11 billion) will remain on hold, Merkel and Sarkozy said in a late-night appearance in an auditorium better known as the home of the Cannes film festival.


Papandreou, summoned to the French resort with his hold on power weakening at home and subject to a confidence vote tomorrow, defended his decision. Greece "needs a wider consensus" for the bailout demands and will choose to stay in the euro, he told reporters at a separate briefing.

The Greek premier declined to say how the referendum will be worded, saying it "is not the moment" to give the exact language, only that "the question is not just about a program, but do we want to be in the eurozone."

EU treaties make no provision for a country to exit the currency, and the European Central Bank’s legal department said in December 2009 that an expulsion "would be so challenging, conceptually, legally and practically, that its likelihood is close to zero."


A decade since Greece fudged fiscal data to win entry to the euro and two years after it triggered the crisis by revising its budget numbers, successive rounds of tax increases and cuts to wages and pensions have deepened a recession now in its fourth year. The economy will contract 5.5 percent this year and 2.5 percent next, according to its 2012 budget. Unemployment reached 16.5 percent in July.

"The reality is the eurozone is telling Greece look, either you’re in or you’re out," said Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington. "Beggars can’t be choosers and you’re going to have to make a decision."


Regaining Control


While leaving the euro would allow Greece to regain control of exchange and interest rates, a September report by economists at UBS AG said its new currency would drop 60 percent, and local borrowing costs would jump at least 7 percentage points, imperiling the balance sheets of banks and companies.

Departure from the European Union would cause trade to fall by half even with devaluation. The cost would be as much as 11,500 euros a person in the first year outside the euro and 4,000 euros in following years, according to UBS.


Merkel and Sarkozy also pledged to step up work to prevent Greece’s travails, now exacerbated by a month-long political campaign, from spilling over to the rest of the 17-country euro area.

Finance ministers will accelerate plans to boost the firepower of the 440 billion-euro rescue fund, the two said. On Oct. 27 euro leaders agreed to use leverage to get the fund’s clout up to 1 trillion euros and told banks to raise 106 billion euros by the end of June to fortify their capital.


‘We Are Steeled’

"We are steeled," Merkel said. The EU decisions aimed at bolstering the euro "have to be carried out more quickly. We must have clarity more quickly. Then we will be in a position to have an appropriate response that’s good for the euro, regardless of how the Greek referendum turns out."


German banks held $12.4 billion in Greek government bonds on June 30, according to the Bank for International Settlements. That excludes 7.2 billion euros in Greek government bonds held by FMS Wertmanagement GmbH, the "bad bank" of Germany’s nationalized Hypo Real Estate Holding AG.

French banks lead the group of Greek creditors among foreign banks with overall claims of $55.8 billion, including $10.7 billion in sovereign debt, according to the BIS. The overall figure for French banks is inflated by $43.5 billion in lending to companies and households, mainly because of Credit Agricole SA’s Greek division, Emporiki Bank SA.



In a sign such hopes will be dashed as the turmoil mounts, Chinese Vice Finance Minister Zhu Guangyao said yesterday it’s now "too soon" for his country, holder of the world’s largest currency reserves, to contribute.


"The Cannes summit will likely take us back to the G-20 as crisis manager, but against a backdrop where the unity that had been the hallmark of the G-20 has already begun to fray," said Daniel Price, who helped organize the 2008 summit for President George W. Bush and is now managing director at Washington-based Rock Creek Global Advisors LLC.



Parts from Ref : Simon Kennedy in Cannes at skennedy4@bloomberg.net ; James G. Neuger in Cannes at jneuger@bloomberg.net

Financial Bail out Greece to be told to keep in line

Very Ineresting reading from the bloomberg wires !!


European leaders racing to prevent their week-old debt crisis strategy from unravelling convene emergency talks today to tell Greece there is no alternative to the budget cuts imposed in the bailout plan.

Greek Prime Minister George Papandreou, his hold on power weakening, was summoned to Cannes on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the "only way to resolve Greek debt problems" is through a deal hammered out last week in a six-day crisis-management marathon.


Papandreou triggered the latest upheaval in the two-year- long crisis by abruptly announcing on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact. Global stocks, the euro and bonds of debt-strapped countries tumbled yesterday as concern of a disorderly Greek default mounted.


"Uncertainty and fear is palpable," Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co. in New York, said by e-mail. "The political cost of the economic austerity does not appear fully appreciated by policy makers or investors."


Papandreou will join a group at about 8:30 p.m. comprising Sarkozy, German Chancellor Angela Merkel, European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde as well as European Union authorities, according to a statement from Sarkozy’s office. 


People ‘Perplexed’

Japanese Finance Minister Jun Azumi said today in Tokyo that "everyone is perplexed" by Greece’s referendum decision and that the issue will be discussed at the Cannes summit.

Italian Prime Minister Silvio Berlusconi, under pressure to cut Europe’s second-biggest debt load, convened a special meeting of advisers late yesterday to discuss budget-cutting plans. Like Sarkozy, Berlusconi held crisis talks with Merkel yesterday. His key cabinet ministers will meet today to draft measures for the country’s financial stability legislation, the Italian news agency ANSA said, citing government officials.


Italy and France’s 10-year borrowing costs climbed to the highest levels relative to benchmark German bunds since before the creation of the euro in 1999. Bund yields fell the most on record, with the securities outperforming all their euro-area peers, as investors sought the safest assets. Greek two-year yields climbed to a record high 87.28 percent.


A day after MF Global Holdings Ltd. filed for bankruptcy after bets on European sovereign debt backfired, financial stocks fell with Morgan Stanley sliding as much as 12 percent in New York trading.

Europe ‘Surprised’

P
apandreou’s announcement, which Sarkozy said "surprised all of Europe," threatens to overshadow a Nov. 3-4 Group of 20 summit in Cannes, France. European leaders had designated the talks as a stage to present their plan to stamp out the crisis and end the threat to the global economy.


"The referendum will be a clear mandate and strong message within and without Greece on our European course and our participation in the euro," Papandreou told his ministers in Athens late yesterday, according to an e-mailed transcript.
It will "ensure this course in the most decisive way".

EU officials had hoped to use the Oct. 27 rescue agreement, which includes renewed commitments to fiscal austerity as well as new rescue resources, to anchor their economic agenda at the G-20 summit and secure support from their counterparts. Now, officials meeting as the confidence vote plays out in Athens will be called on to assess the deal’s -- and the euro’s -- future, especially if Papandreou’s government falls and Greece comes under more pressure to default or leave the common currency.

Rescue Fund


European leaders agreed to boost the European Financial Stability Facility’s firepower to 1 trillion euros ($1.4 trillion), set aside 100 billion euros for Greece and provide 30 billion euros in collateral for a debt swap that will give Greece’s investors new, lower-risk bonds at 50 percent of the existing bonds’ face value.


The deal to reduce Greece’s debt load will do nothing to aid the country’s recovery from recession, opposition New Democracy leader Antonis Samaras said on Oct. 27. Papandreou’s majority meanwhile slipped as his support narrowed to 152 lawmakers in the 300-deputy parliament amid a party rebellion.

‘Profound’ Risks


Whether the EU’s plan would succeed "was a matter for debate. But at least there was a plan," Yiannis Koutelidakis of Fathom Financial Consulting in London, said in a note yesterday. "The risks engendered by this move are profound for the euro in general, not just for Greece as the expulsion of any one member state would critically undermine the Economic and Monetary Union."


Such uncertainty "will likely block any" governments outside the euro-area from stumping up cash for its reworked rescue fund as the continent’s leaders would like, said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc. While Brazil and Russia have signalled a willingness to help, Chinese officials say they want more details.


A lack of outside assistance will leave the ECB under pressure to keep buying the bonds of stressed states, Cailloux said. Today’s meetings are Draghi’s first on the international stage since he took over the ECB presidency yesterday from Jean- Claude Trichet and come a day before he chairs a meeting of the ECB’s Governing Council for the first time.


While Nomura Holdings Plc economist Jens Sondergaard said he expects the ECB to leave its benchmark rate at 1.5 percent this week, the "adverse market reaction" to Greece’s referendum call leaves a one-in-three chance of a 25 basis point reduction.


Ref :
Reporters on this story: Rebecca Christie in Brussels at rchristie4@bloomberg.net ;
Simon Kennedy in Paris at skennedy4@bloomberg.net


Editor responsible for this story: James Hertling at jhertling@bloomberg.net

TAX SUBMISSIONS TO SARS

Dear All

Please note as non provisional tax payers (in summary persons earning a only salary income no other income and not a Company or Trust) who are registered with SARS for e-filling but submitt there tax returns by 25th November 2011. An queries give me a shout for assistance.

Steven