It’s already been a busy week with an interest rate announcement still to come as well. Credit ratings agency, Fitch has fired a warning shot calling on the South African government to keep its debt to GDP ratio in check, or face a further downgrade into junk territory. Failing state owned enterprises and municipalities have drained the fiscus, non more so than Eskom, which, by the way, is possibly coming into more troubles. It’s former Chief Operating Officer, Jan Oberholzer will officially exit Eskom at the end of the month and the Minister of Energy has expressed doubts about Koeberg’s refurbishment timeline. Unit one is scheduled to return to service this July with Unit two being taken out in September. If this process overlaps leaving both units out

of commission, it will wipe out electricity generation equal to one stage of loadshedding.

With all these problems, it’s not surprising that capital is fleeing our shores. Ninety One, South Africa’s biggest asset manager has lost nearly R110 billion in assets under management in the past three months - a staggering amount.

PLEASE NOTE: Following Wednesday morning’s release of June’s inflation figures, ETM now expects the SARB to leave the repo rate unchanged at Thursday’s announcement. Annual CPI declined from 6,3% in May to 5,4% in June. Core inflation ( CPI excluding food and fuel) also dropped slightly to 5% last month. Inflation is expected to drop further in July which could provide some breathing room for the SARB.

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