Terror on the dance floor

Monday night’s explosion at an Ariana Grande concert in Manchester, England, that killed at least 22 and injured more than 50 is the latest in a series of recent terror attacks aimed at the West.

British Prime Minister Theresa May said the government is trying to establish the “full details” of the “appalling terrorist attack” and was expected to call an emergency cabinet meeting to deal with the horror.

But this was not the first time May, and other European leaders, have had to deal with a deadly terror attack — and the threat to the U.K. from international terrorism is severe.

Here is a timeline of recent terror attacks in Europe:

April 20, 2017: Champs Elysees Attack in Paris

An attacker got out of a car and fired an automatic weapon at a parked police van, killing the officer inside, before shooting at others standing on the nearby sidewalk, injuring two before he was shot and killed by police.

The French president said the attack was “terrorist in nature” and promised “utmost vigilance.”

The Islamic State claimed responsibility for the attack.

April 7, 2017: Stockholm Truck Attack

Five people were killed when a truck driven by a man drove into a pedestrian shopping street and department store in Sweden’s capital city, wounding over a dozen others.

The 39-year-old man allegedly admitted to being a member of ISIS and told police that he had “achieved what he set out to do.”

April 3, 2017: Saint Petersburg Bombing

A suicide bombing on the subway in Russia’s second largest city killed more than a dozen passengers and injured dozens more.

March 22, 2017: Westminster Bridge Attack

Five people, including a London police officer who was stabbed and the perpetrator, were killed in a terror attack. More than 40 people were injured outside the Parliament building.

British Prime Minister Theresa May said the act was “sick and depraved.”

ISIS later claimed responsibility.

February 3, 2017: Louvre Knife Attack

A machete-wielding man yelling “Allahu Akbar” attacked soldiers in a shopping mall near the Louvre in Paris. He was shot and wounded by soldiers.

December 19, 2016: Germany Christmas Market

A large truck plowed through a Christmas market in central Berlin, which killed 12 and injured 48 others.

ISIS claimed responsibility for the attack and said the attacker was “a soldier of the Islamic State” through Amaq news agency.

November 28, 2016: Ohio State

Abdul Razak Ali Artan, an Ohio State University student, ran his car into a group of students, and slashed people with a butcher knife.

The Islamic State claimed responsibility for the attack and called Artan a “soldier.”

October 16, 2016: Hamburg, Germany

There was a “lone wolf” knife attack in Hamburg, Germany, killing one teenager.

July 26, 2016: Normandy, France

Two men took five people hostage during a mass at a church in Normandy, and murdered an elderly priest by stabbing him in the chest and slitting his throat. The hostages were freed later, and the two men were arrested.

Then-President Francois Hollande said that the men carried out the attack in the name of ISIS.

July 14, 2016: Nice, France

77 people were killed in Nice, France when a truck drove through a crowd on Bastille Day.

ISIS claimed responsibility for the attack.

June 12, 2016: Orlando Nightclub Shooting

Omar Mateen attacked an Orlando gay nightclub, killing 50 people. Mateen pledged allegiance to ISIS on a 911 call, after the worst mass shooting in U.S. history, and the worst terrorist attack on U.S. soil since 9/11.

ISIS later claimed responsibility for the attack

March 22, 2016: Belgium Attack

There were two suicide bombings on March 22, 2016—one at Brussels Airport and the other in the city’s subway system. Combined, the attacks killed 32 people.

The ISIS cell that claimed responsibility for the Brussels attack was also linked to those involved in the November 13, 2015 terror attacks in Paris.

January 11, 2016: Marseille, France

A teenager attacked a Jewish teacher in Marseille with a machete. He told police that he carried out the attack in the name of the Islamic State.

January 7, 2016: Philadelphia, Penn.

A man shot and wounded a Philadelphia police officer. The man claimed the attack was in the name of Islam and the Islamic State.

December 2, 2015: San Bernardino Shooting

A married couple shot and killed 14 people in San Bernardino, Calif. The FBI is investigating the shooting as an act of terrorism inspired by ISIS.

November 13, 2015: Paris Attacks

A series of coordinated terrorist attacks in Paris killed 130 people and injured hundreds more. The attacks consisted of mass shootings and suicide bombings.

The Islamic State claimed responsibility.

August 21, 2015: Paris

Three Americans were at the center of an attempted mass shooting. They helped to overpower a gunman who was armed with a Kalashnikov, and opened fire on a train from Amsterdam to Paris.

The gunman was on the radar of European counterterrorism agencies, and appeared to be sympathetic to ISIS.

February 15, 2015: Denmark

A Denmark national who was inspired by ISIS went on a rampage through the nation’s capital, killing two and wounding five police officers.

January 7-9, 2015: Charlie Hebdo

There was an attack on the offices of the satirical magazine Charlie Hebdo, and four attacks around Paris followed, killing 17 people.

ISIS claimed responsibility for the attacks.

By Brooke Singman for Fox News

On Friday, doctors at Whipps Cross Hospital, east London, logged into their computers, but a strange red screen popped up. Next to a giant padlock, a message said the files on the computer had been encrypted, and would be lost forever unless $300 was sent to a Bitcoin account – a virtual currency that cannot be traced. The price doubled if the money wasn’t sent within six days. Digital clocks were counting down the time.

What happened?

It was soon revealed Barts Health Trust, which runs the hospital, had been hit by ransomware, a type of malicious software that hijacks computer systems until money is paid. It was one of 48 trusts in England and 13 in Scotland affected, as well as a handful of GP practices. News reports soon broke of companies in other countries hit. It affected 200,000 victims in 150 countries, according to Europol. This included the Russian Interior Ministry, Fedex, Nissan, Vodafone and Telefonica. It is thought to be the biggest outbreak of ransomware in history.

Trusts worked all through the weekend and are now back to business as usual. But the attack revealed how easy it is to bring a hospital to its knees. Patients are rightly questioning if their medical records are safe. Others fear hackers may strike again and attack other vital systems. Defence minister Michael Fallon was forced to confirm that the Trident nuclear submarines could not be hacked.

So how did this happen? The virus, called WannaCry or WannaDecrypt0r, was an old piece of ransomware that had gained a superpower. It had been combined with a tool called EternalBlue which was developed by US National Security Agency spies and dumped on the dark web by a criminal group called Shadow Brokers. Computers become infected with ransomware when somebody clicks on a dodgy link or downloads a booby-trapped PDF, but normally another person has to be fooled for it to harm a different computer. EternalBlue meant the virus could cascade between machines within a network. It could copy itself over and over, moving from one vulnerable computer to the next, spreading like the plague. Experts cannot trace who caused it, whether a criminal gang or just one person in their bedroom hitting “send”.

Like a real virus, it had to be quarantined. Trusts had to shut down computers and scan them to make sure they were bug-free. Doctors – not used to writing anything but their signature – had to go back to pen and paper. But no computers meant they couldn’t access appointments, referral letters, blood tests results or X-rays. In some hospitals computer systems controlled the phones and doors. Many declared a major incident, flagging up that they needed help. In Barts Health NHS Trust, ambulances were directed away from three A&E departments and non-urgent operations were cancelled.

The tragedy is that trusts had been warned of such an attack. Dr Krishna Chinthapalli, a junior doctor in London, wrote an eerily premonitory piece in the British Medical Journal just two days earlier telling hospitals they were vulnerable to ransomware hits.

How to avoid ransomware
Ransomware is a sophisticated piece of malware that blocks the victim’s access to their files, and the only way to regain access to the files is to pay a ransom.

Here are a few tips to avoid ransomware:

  1. Back up everything on the company network – create a sane, quiet backup system and use it daily.
  2. Don’t use Windows XP – it’s a little hard to believe but unsupported operating systems on office computers put data at risk. Consider an upgrade.
  3. Buy a hard drive and back up documents off-site – even if ransomware hits you overnight, you’ll have a few days’ data on this external backup. This will prevent the destruction of important records.
  4. Back up to the cloud – use an internet-based service like Google to store back ups.
  5. Ensure your network security is up-to-date. Install any patches provided by the security software you use.

Businesses often cite cost as a pain point when explaining why they don’t have back-ups or adequate security.
The ultimate question businesses need to ask themselves is: can your company afford to pay the ransom?

Sources: Madlen Davies for www.newstatesman.com; www.techcrunch.com

My Office News launches

My Office magazine unveiled its new direction at a launch breakfast at the Bryanston Country Club in Johannesburg today.

My Office News will provide both members and readers with a variety of new digital offerings.

The breakfast was opened by shop-sa chairman Hans Servas, in which he introduced the morning’s guest speaker: Matt Brown of Digital Kung Fu.

Brown set about explaining what digitisation is and how it will impact businesses across industries, which is discussed in detail below.

After the talk held by Brown, Rob Matthews of My Office News presented an outline of the product offerings.

Matthews outlined the advantages of digital, which include reduced cost to advertisers; flexibility to change artwork; broader coverage; speed of publishing; and better metrics (regarding delivery and readership).

“My Office is getting 6 000 unique visitors a month, with over 21 000 visits. The majority of the readers are in the Gauteng area, with an above-average concentration in the Western Province. These visitors spend in excess of three minutes on the site.”

The newsletter, sent out once a week on Wednesday, is received by more than 5 000 people with an average of 99,5% delivered and an open rate in excess of 25%.

“We are aiming to grow the database by 8 000 by the end of the calendar year,” says Matthews.

Digitisation and disruptive technologies

The changing digital environment
Digitisation is the conversion of something non-digital into something digital, disrupting it using digital technology.
“When it comes to digitisation, experts are clueless,” says Brown. Many great minds have missed some of the largest technical inventions of the 19th, 20th and 21st centuries. Examples of this include Western Union brushing off the telephone, and the head of IBM questioning the validity of the personal computer.

Drivers of disruption  
The drivers of disruption in the evolution of media include:
Consumer pull – a growing number of people willing to use the product
Technology push – more people are connecting to technology than ever before
Economic benefits – the benefits of going digital are now exponential

‘Digital’ is more than marketing
When digital arrived in South Africa, major advertising agencies bought out smaller ones in order to bring advertising in-house.
In the 1970s, WPP, OmniCom and IPG had traditional companies. Now the most forward-looking digital agencies in this century are Google and Facebook – technology companies.

The six Ds of Digitisation
The process of digitisation is rapid – so rapid that it is now exponential. The six Ds show a road map of rapid development that results in upheaval.

  • Digitisation – when something is presented in ones and zeroes it becomes an information-based technology subject to exponential growth.
  • Deceptive – digitisation can be deceptive in its initial period because growth doesn’t seem that fast, but it soon picks up speed.
  • Disruptive – the digital technologies disrupt existing industries because they outperform them in both effectiveness and pricepoint.
  • Dematerialised – major devices of the 1980s (such as a boom box and a telephone) have been are now in one device – the smartphone. Separate products become one product.
  • Demonitisation – this occurs when commodities (such as vinyl record stores) are made accessible via technology (such as iTunes) and thus become worth less or even free.
  • Democratisation – this is where the marketplace explodes. As more people join the digital world, technology becomes available to more people to use.

In 2000 6% of the world’s population connected to the Internet; 66% of the population will be connected by 2020. Companies like Google seek to democratise technology and connect the world with projects such as Google Loon.

Artificial intelligence
Intelligent machines that can behave like humans has become the next frontier. Many major companies have invested R&D money in this field.
Currently, we think AI is “dumb”; just embryonic technology that is used in “personal assistants” on platforms such as iOS (Siri), Amazon (Alexa) and Microsoft (Cortana).
There are three types of AI:

  • Artificial narrow intelligence – such as Google Maps, this type of AI can do only one thing at a time
  • Artificial general intelligence – this is what we see in current levels of intelligence found in humans
  • Artificial super-intelligence – this level of AI is far more intelligent than all humans combined – and this could ultimately see the end of humanity. Examples of this power has been evidenced in robots that can beat poker players and predict Supreme Court decision outcomes.

Changes in banking
Banks will soon become outdated if they don’t want to adopt digitisation technologies such as BitCoin and Blockchain. High bank fees and the cost of employing humans will render the old systems obsolete. Examples of this have already occurred in the taxi space. Taxi drivers protested the arrival of Uber – so Uber decided to roll out self-driving cars. And Uber drivers then protested

Unlocking value with data
Sensors are being implemented in jet engines to measure data that is returned to data analysts who attempt to reduce risk and improve efficiencies. The sole purpose of this is to learn where money can be saved, streamlining companies and generating value from data.

Businesses must accept reality
“Most businesses refuse to accept the inevitable,” says Brown. “People think that things aren’t broken so why fix it? But if they don’t consider changing, they may be left behind.”
Businesses need to ask the tough questions so they can get the right answers.
“Companies need to bend with the wind. If they are to exist in the future, they need to be agile and change to adapt to the market.”

Consider what will put you out of business and start strategising about how you will address the problems that haven’t become problems yet.

Matt Brown is the CEO of Digital Kungfu, a digital business consultancy that specialises in helping companies accelerate innovation and disrupt traditional markets by enabling them with new ways to do business that serve their customers more effectively and responsively.

Controversial advisor to finance minister Malusi Gigaba, Professor Chris Malikane, has warned South Africans to be “prepared for the worst” for radical economic transformation to succeed in South Africa, according to a report by the City Press.

Speaking at a Blacks in Dialogue event in Johannesburg on Saturday evening, Malikane was frank about the reality of radical economic transformation – but doubled down on his support of it, calling for changes to the Constitution and the nationalisation of major sectors of the economy.

Malikane said that a radical economic transformation policy would plunge the country into a crisis, based on what happened in Venezuela, India and Zimbabwe – where similar strategies were introduced – and that people needed to prepare themselves for that eventuality.

“If we are real about transformation, we need to be real and strengthen our people ideologically and politically. We need to organise and educate our people. Did you think to transform is going to be nice?” he asked.

“We need a two-thirds majority to change the Constitution. Otherwise, to achieve what we want to achieve, we need to go that route [take up arms]. Let’s try two-thirds. I don’t like war,” Malikane said.

Earlier this month the national treasury was forced to put out a number of fires after Malikane published an article advocating, among other things, the nationalisation of banks.

In an opinion piece published in the Sunday Times, Malikane said he was in favour of government taking over the banks, mines and insurance companies.

National Treasury said in an explanatory statement that the views expressed in the opinion piece were not necessarily government policy. “Professor Malikane is within his rights as an academic and an activist to contribute ideas to national discourse on any subject.

“Minister Malusi Gigaba wishes to place on record that the work of the Ministry of Finance will continue to be guided by policies of the ANC, as articulated in conference resolutions and in the 2014 election manifesto.”

The disconnect between the finance minister and his adviser has caused concern amongst financial analysts, opposition parties and civil groups, who have noted that such a drastic difference in policies reflected poorly on a country which was facing extreme economic volatility.

Source: www.businesstech.co.za

After then finance minister Nhlanhla Nene was axed in December 2015, the rand weakened dramatically. This time around, however, despite the even worse news of Pravin Gordhan’s axing and SA’s downgrade to junk status, the rand has proved remarkably resilient.
How do we square this? Are the markets getting so used to bad news coming out of SA that they have stopped reacting to it? Or is there some other factor at play?
Before President Jacob Zuma’s cabinet reshuffle on March 30 the rand was trading at R12.40/$. In the following two weeks it weakened by roughly R1.50 against the dollar. But at the time of writing, it had reversed almost one-third of its losses, firming by 50c to trade at R13.40/$.

What is evident is that the local news flow — dominated by mass protests against Zuma and a growing clamour for his resignation — certainly doesn’t justify the biggest rand rally in six months.
“Total rand losses of a mere R1 seem remarkably limited given all that has happened,” says Rand Merchant Bank (RMB) currency strategist John Cairns.
Dollar weakness and better Chinese trade data appear to have triggered the latest rand gains, but far more interesting is the currency’s longer-term outlook.
Surprisingly, given how much SA’s prospects have darkened, Cairns has not downgraded his rand forecast of R13/$ for the year end. Of course, the situation remains in flux and RMB could still change its rand forecast. But for now, Cairns says there are two positive factors RMB believes might offset the negatives.
First is the significant narrowing of SA’s current account deficit. This has been caused mainly by slowing imports due to falling domestic demand and firmer exports following the recovery in commodity prices.
RMB expects the deficit to average 2.8% this year compared with an average of 3.3% in 2016 and 4.4% in 2015. This will take significant pressure off the rand.
Second, a more positive growth outlook in advanced economies has contributed to a more favourable environment for emerging markets and commodity currencies as a whole. As a result, foreign capital inflows into SA’s bond market have held up remarkably well.
The favourable external backdrop helps to explain why the market reaction to SA’s recent downgrades has been more benign than experienced by other countries when they lost their investment-grade status.
“We continue to feel that the external backdrop is restricting far bigger losses on our local markets,” says Cairns, “It seems a rising tide lifts even half-submerged boats.”
Efficient Group chief economist Dawie Roodt is also sticking to his year-end rand forecast of R13/$.
Both Roodt and Cairns are assuming that Zuma will stay on as president this year and that there will be no further dramatic political negatives or further downgrades to SA’s local currency rating.

Like Cairns, Roodt made this forecast many months before Zuma reshuffled his cabinet and caused many to wonder if SA’s democratic project had permanently run aground. So the fact that he hasn’t lowered his forecast also bears scrutiny.
Roodt has a remarkably successful track record in correctly predicting the rand, having won the 2016 Sake24 economist of the year award for the accuracy of his forecasting against that of more than 30 other economists.
His forecast that the currency would average R13/$ in the final quarter of 2015 was the closest to the actual figure of R13.09/$.
Roodt looks set to be closest to the pin again this year, with a forecast of R14/$ for the final quarter of 2016 compared with the actual figure of R13.91/$.
In January 2016, when he made this forecast, the rand rose to a new record high of almost R18/$ during intraday trading as the markets battled to digest the axing of Nene.
“Everyone said I was crazy,” chuckles Roodt. “Some said the rand would be R20/$ by the year end.”
He bases his rand forecasts on the observation that on a 35-year view (1980-2015), the rand has on average been roughly 50% undervalued against the US dollar on a purchasing power parity (PPP) basis (see graph).
The easiest way to understand the theory of PPP is to use The Economist’s Big Mac index. It was invented as a light-hearted tool to make it easier to compare the misalignment of exchange rates between countries. It was never intended as a precise gauge, explains the magazine, but rather a fun way of explaining PPP.
In January 2017, the price of a Big Mac burger in the US was $5.06. In SA it was R26.32. At the prevailing exchange rate of R13.95/$ at the time, a Big Mac in SA cost only $1.89.
So according to the “raw” Big Mac index, the rand was undervalued by almost 63% against the US dollar on a PPP basis.
This made the rand the fourth most undervalued currency against the US dollar among 44 countries surveyed, after Malaysia (64.6% undervalued), the Ukraine (-69.5%) and Egypt (-71.1%)
Roodt bases his study of PPP not just on the Big Mac, but on a more representative basket of goods published as a series by Oxford Economics, one of the world’s largest data providers.
By this yardstick, the rand at R13/$ would be 54% undervalued, making Roodt fairly confident the currency will move back towards this level over time.
“I’m pretty sure the rand will come back. It always does, very strongly, but it never resets to purchasing power parity. It is always about 50% undervalued on average. So if it stays at R14/$, and inflation remains where it is now, then this would be an exception,” says Roodt.
Roodt, in fact, considers the rand at R14/$ to be a “screaming buy”, given that SA’s 10-year bond yield is highly attractive at 9% and that SA’s bond market is exceptionally liquid and well-integrated, so investors can get out quickly.
“Where can you get such an attractive yield with an undervalued currency at the same time?” he asks.
This explains foreign investors’ continued appetite for SA bonds, despite the highly uncertain political environment.
Based on Roodt’s PPP estimates, the rand has fared remarkably well during the current crisis compared with previous episodes.
In nominal terms, the rand dropped by just 12% in the first two weeks after Gordhan’s axing before pulling back sharply. In PPP terms the rand at its recent worst of R13.95/$ was just 56% weaker than parity.
By comparison, in 1985 after then president PW Botha’s famous “Rubicon” speech, in which he failed to announce the dismantling of apartheid, the rand nose-dived by 66% in nominal terms. It was the sharpest nominal decline in the history of the currency.
At its worst, the rand was 72% undervalued against the dollar but it recovered shortly thereafter, mostly because inflation accelerated.
During the 2002 rand crisis, contagion from the Asian financial crisis caused the rand to collapse by 47% in nominal terms. It reached an undervaluation low of 73% but again bounced back quickly, mostly because of a nominal exchange-rate correction, helped by some inflation.
The rand suffered another huge blow when Nene was axed. At its worst level of R18/$ it was 69% weaker than parity. The reasons for the rand’s fall were mostly political but, unlike now, unfavourable international forces were also at play.
At the time, fears were growing that China was heading for a hard landing. The deteriorating growth prospects of emerging markets, particularly for commodity-producing countries such as SA, caused persistent capital outflows from these markets.
Had the same global conditions been in place now, there is little doubt that the fallout from Gordhan’s axing and SA’s downgrade to junk would have been far more severe. This doesn’t mean the political and economic implications aren’t deeply worrying — only that Zuma’s timing was excellent.

By Claire Bisseker for www.businessday.co.za

SA’s big banks go to court

Unhappy banking clients have instituted legal action against the banking ombudsman and a number of South African banks due to the manner in which they handle Internet fraud cases, according to a report by the Rapport.

20 Absa and Standard Bank clients, who have each lost between R1 million and R2 million to Internet banking or SIM swap fraud, want the banks to be held accountable for fraudulent action.

The ombudsman meanwhile, will not open a case of fraud against a bank unless clients can prove that the bank’s acted negligently. If no negligence can be proven by the bank, it unfortunately means that the complainant is negligent.

In 2016, only 22% of cases of Internet fraud in South Africa was ruled in favour of the customer, while the remaining 940 cases of Internet banking-related complaints went in favour of the banks.

According to the report, the banks and the ombudsman argue that where a PIN or a password is fraudulently obtained, the client must be responsible as they are the only persons privy to that information.

However the 20 clients claim they never acted negligently nor did they give out personal information that could have compromised their accounts. They also argued that they have no way of proving a breach took place through the banks or via a cellular provider meaning it was next to impossible to prove who was at at fault.

They pointed to a recent case in which one of the 20 customers instituting the action had to take both Absa and Vodacom to court in order to determine who authorised a SIM swap on her cell number and therefore had access to her Absa bank account.

It was only after the court ruled in her favour and ordered that the client be given access to the records and was able to build a case that she was not liable for the fraud, said the report.

Source: www.businesstech.co.za

While it is well documented that junk status has a number of dire consequences for both South Africa, and its people, more important is to consider how long the country can expect to be stuck with a junk rating say Lullu Krugel and Christie Viljoen, economists at KPMG.

On Monday, ratings agency S&P Global lowered South Africa’s sovereign debt to below investment grade, with Fitch and Moody’s likely to follow.

Hours after S&P announced that it would be downgrading South Africa to junk status, Moody’s confirmed that it would also be placing the country on review for downgrade, though the group has now delayed its report for at least 30 days as it assesses the country.

Economists have warned that the downgrade to junk is likely to trigger a recession as its effects spread to the wider economy.

“The downgrade greatly complicates the prospects for South Africa being able to stage an economic recovery. Without a growth recovery, employment growth and revenue collection will stagnate and may even decline,” said CEO of the South African Institute of Race Relations, Frans Cronje.

Research by KPMG into the sovereign ratings assigned by the three largest rating agencies – S&P, Fitch Ratings and Moody’s Investors Service – over the past three decades indicates that 15 countries have seen their investment-grade ratings revoked but were then able – over time – to regain this status.

These countries include Colombia, Croatia, Hungary, Iceland, India (twice), Indonesia, Ireland, Korea Republic, Latvia, Romania, Slovakia, Slovenia, Thailand, Turkey and Uruguay.

Of these countries, Krugel and Viljoen noted that the rating downgrades were broadly grouped into four categories:

Economic deterioration (Colombia, Hungary, India, Latvia and Romania);
Unsustainable macroeconomic imbalances (India, Slovakia and Slovenia);
A domestic currency, financial or banking crisis (Croatia, Iceland, Ireland, Thailand, Turkey and Uruguay); and
A currency, financial or banking crisis resulting directly from neighbouring or regional influences (Indonesia and the Korea Republic).
“These countries’ diverse experiences show that it takes, on average, seven years to again graduate to the investment-grade club.”

The economists said that countries like Croatia, Iceland, Ireland, Korea Republic, Latvia and Slovenia were able to do so in three years or less. At the opposite end of the spectrum, and depending on which rating agency was involved, there were instances where it took Colombia, India, Indonesia, Turkey and Uruguay more than a decade.

Strategies used to return to investment-grade

In addition to an analysis of why countries had historically been downgraded to junk, Krugel and Viljoen also released a report detailing how these countries typically managed to return to an investment-grade rating.

“Strategies and narratives on countries that recovered their investment-grade ratings are broadly grouped into six categories,” noted the duo.

These include:

Fiscal consolidation and/or austerity (Hungary, Ireland, Latvia, Romania and Slovenia);
Significant economic and political reforms (Colombia, India, Indonesia, Turkey and Uruguay);
Declining external and fiscal vulnerabilities (India and Thailand);
Debt restructuring and economic policy reform (Korea Republic);
Privatisation of the sovereign’s holdings in private/semi-state companies (Croatia); and
Active intervention by a newly elected government (Iceland and Slovakia).

South Africa
South Africa is most closely associated with the countries experiencing economic deterioration and, possibly, those having unsustainable macroeconomic imbalances, said Krugel and Viljoen.

“On the issue of how South Africa will be able to return to its former investment-grade rating, the key element in a recovery process is that admission that a problem exists and that work is needed to rectify this,” Krugel and Viljoen said.

However the economists noted that following the downgrade announcement by S&P, the National Treasury appeared far from concerned with the development

“The commitment to fiscal consolidation was reiterated, coupled with a rebuttal that South Africa is committed to a predictable and consistent policy framework and that open debate on policy matters should not be a cause for concern.”

Zuma breaks the rand – again

The rand was weaker on Tuesday afternoon as it emerged that President Jacob Zuma had told senior leaders of the South African Communist Party (SACP) that he planned to fire Finance Minister Pravin Gordhan.

When the market learnt on Monday that Zuma had recalled Gordhan and his deputy, Mcebisi Jonas, from an investor trip to the UK and US, the rand nosedived from 20-month highs it scaled last week.

The president is reported to have told senior leaders of the South African Communist Party that he plans to dismiss the finance minister.

After hitting a fresh 20-month best level of R12.31 against the dollar in Monday’s opening trade‚ the rand plunged more than 3%, or 52c, to an intraday worst level of R12.8295/$ in the afternoon.

The rand also weakened against global majors and went from being the best-performing emerging-market currency to one of the worst-performing currencies.

Rand Merchant Bank (RMB) analyst John Cairns said further runs on the rand were possible but Monday’s rand losses were nothing compared with what happened in the worst-case Cabinet reshuffle scenario when former finance minister Nhlanhla Nene was replaced in 2015. At that time, the rand shed 150c immediately and 250c within a month.

Cairns said the best rand scenario for the day was for the rand to stabilise above R12.50/$ within a 30-cent range, the worst case scenario would be a Cabinet reshuffle.

At 11.30am the rand was at R12.9766 to the dollar from a previous close of R12.7616. It was at R14.0954 to the euro from R13.8647 and at R16.3203 to the pound from R16.0221.

The euro was at $1.0859 from $1.0864.

By Reitumetse Pitso for www.businessday.co.za

Hike or no hike?

South Africa Reserve Bank Governor Lesetja Kganyago discusses currency manipulation, the performance of the rand, and the future of the central bank’s rate increase cycle.

South Africa’s central bank can’t yet call the end of its interest rate-increase cycle, even as the risks to inflation have eased since the Monetary Policy Committee’s January meeting, Governor Lesetja Kganyago says.

“It’s too early for me to make the call as to whether we are still on the tightening cycle or not,” Kganyago said in an interview with Bloomberg Television’s Jonathan Ferro. “We can’t say that” the increase cycle is now over.

Kganyago said in November the MPC may be close to the end of the tightening cycle in which it raised the benchmark lending rate by 200 basis points over two years to 7 percent by last March. This was in bid to bring price growth back to within the government’s target band after being outside it for most of last year as a drought raised food prices and the rand reached record lows.

The MPC, which will announce its next policy move on March 30, targets inflation between 3 percent and 6 percent.

Price growth eased to 6.6 percent in January, the first slowdown in five months, and five-year breakeven rates, a measure of inflation expectations, fell to the lowest since April 2015 on Friday. Oil and food price still pose risks, Kganyago said.

The risks to inflation have “definitely been mitigated compared to the previous policy-setting meeting,” he said. “Clearly, the recovery of the currency helps, but the rise in oil prices doesn’t help. Clearly the good rains help and the price of grains will come down, that helps, but that farmers are restocking their herds and meat prices remain high, doesn’t help.”

The rand was little change at 12.7712 per dollar by 3:02 p.m. in Johannesburg on Friday. Yields on rand-denominated bonds due December 2026 fell two basis points to 8.52 percent.

Economic growth in Africa’s most industrialized nation slumped to 0.3 percent for 2016, lower than government and central bank estimates, and the slowest rate since a recession seven years earlier

The central bank forecasts the economy will expand 1.1 percent this year, and 1.6 percent in 2018. There is still significant downside to growth, Kganyago said.

By Arabile Gumede for Bloomberg

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My Office News Ⓒ 2017 - Designed by A Collective


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