Tuesday the 24th of August. It was seen to be a calm day in the markets.
The Rand was hovering around R13.55-60 to the US Dollar, and gradually strengthened throughout the day.
And then just after 5pm, that all changed. Fast.
By 7pm, we had already seen the Rand touch R13.97/$!
What?... How?!.. Who??...
South Africans could not believe their eyes as so much good work was undone in a matter of hours.
Such violent movement sent sentiment into absolute turmoil.
By 8:40am today, the Rand had moved over R14.10 to the US Dollar, and was still showing strong signs of moving further.
After such a good few months of consistent Rand strengthening, during the aftermath of Brexit, this was not something that was foreseen by many.
However... our esteemed politicians and their cronies might have had a clue...
SAGA #1
Late yesterday afternoon, the news came out that Hawks had requested Finance Minister Pravin Gordhan, the South African Finance Minister, to appear before them at 10am on Thursday morning.
This was seen as the next step to their charging him, from the SARS 'rogue unit' saga which has kept dragging on in a clearly political battle between Gordhan and Zuma and his cronies..
This is not good news for the country or the economy.
SAGA #2
However, this was not the only news. It has been known by some, but not all, for quite some time now, that there were some very dodgy deals going down in December, with South Africa's Strategic Oil Reserve.
The story now seems to have been unveiled to a larger part of the public, and is along these lines:
In December, the SA Government sold 10 Million barrels of Strategic Oil Reserves at around $10 per barrel LESS than the market price at that time.
Makes economic sense? No.
Stinks of Corruption? Yes.
This deal is said to have cost South African Taxpayers between R1.5-2.2bn.
This looks horribly of an ANC scandal. Another one. Bad for investor confidence and sentiment!
Rumour has it that there is even more to this story... See Rand Daily Mail's Article on who is making the profit of this sale. But seeing as we cannot confirm these facts currently, we won't claim anything just yet.
SAGA #3
Thirdly, reports on Tuesday said Zuma would now head up all SOCs (State Owned Companies), which came out of the briefing of the Cabinet Lekgotla on Monday.
We don't need any introduction to Zuma's and his cronies' self-serving interference in SOCs.
And of course, the Guptas have been central figures in the narrative of state capture, with persons saying they are using their influence on government to get special treatment at SOCs such as Eskom.
The Guptas have interest in uranium too - any wonder why Zuma is pushing for a 9.6GW nuclear programme - which requires uranium...??
With this in mind, don't expect political disasters to stop exploding into the public eye any time soon...
The way forward...? |
In the wake of events like this, expect markets to be as choppy as a stormy winter Cape Town sea.
There is bound to be more activities going on in the background of these scandals, as there is always more than meets the eye.
Obviously, this has affected sentiment, which is showing in the sharp move we have seen. Whether this increase in negative sentiment has been enough to change the larger term trend, still remains to be seen. We are analysing every inch of the markets right now, and are in the process of putting out forecasts for each timeframe.
This interim forecast is part of the service that we offer. If the markets move unexpectedly to invalidate the old ones, we will never leave our subscribers in the dark.
For those of you who are subscribed, standby for the upcoming forecasts. For those of you who are not, perhaps it is time to hop on board to see where this rollercoaster is likely to be taking us!
As always, I would love to hear your comments and feedback - please leave a comment below.
To your success~
James Paynter
