Bondage not so hot: Old Mutual Asset Managers (Omam) has announced its official expectations for local markets this year, saying it believes shares will out-perform bonds and cash.
Omam points out that world equity arkets, including South Africa, usually perform well after the United States Federal Reserve has dropped interest rates. Omam expects that there might yet be a cut in local interest rates this year, as long as the rand — which touched a new low of R7,94 this week — recovers some stability. Local equity prices should also be helped by the lower bond prices, which developed last year. Any tax cuts in the national budget, to be announced on February 23, will also help matters. Of course, Omam is hoping you’ll get into equities via its unit trusts — tread carefully.
Pockets of weakness: Traditional (non-hi-tech) United States industry was in recession during the second half of last year — and it constitutes 92% of all US manufacturing. If you weren’t building computers or cellphones in the US last year, your business probably declined by an average 1,4% and 5,1% in the third and fourth quarters. That’s called recession.
Luck of the Irish: The European Commission cracked down on Ireland this week, drawing a red line through the proposed budget of the European Union’s fastest-growing country. Flush with the success of an economy that expanded by more than 10% last year, the Irish government wants to both cut taxes and increase spending — but the EU wants its member governments to hold down spending for the sake of economic stability. Wednesday’s veto by the commission was the first time it had used such powers.
Slippery digits, again: At 3.30pm on Thursday afternoon, the rand was trading at R7,87 to the dollar and R11,42 to the pound. Gold, at $265 an ounce, was still hanging in as worth marginally more than lead. The overall index of the Johannesburg Stock Exchange, at 8 892, is now 5% up on its December closing price of 8 543.