DESPITE some pre-speech jitters, South African bonds moved stronger on the back of President Thabo Mbeki’s “nothing new” state-of-the-nation address.
At 1220 local time (1020 GMT), the key benchmark government R150 bond was at 11.405% from a previous close of 11.420%.
The longer-dated R153 was at 12.04% from a previous close of 12.08%. The currency and equity markets also reacted positively to the address.
“The fact that the speech did not prompt a sell off is a good thing,” said one dealer.
Another dealer said that he was not very excited by the speech and that it gave no reason to get overly bullish.
“If we go stronger, it will not be because of the speech,” he said.
Mbeki, who declared the economy was now on “a strong base”, said that immigration laws will be reviewed urgently to allow South Africa to attract skills and that ports will be made more efficient, with concessions granted and competitive tariffs introduced.
He also said international flights will be increased to promote tourism, the national parks developed and financial services sector will be reviewed.
He said the government will preside over a “managed liberalisation” of the energy, transport and telecommunications sectors to introduce greater competition, which were aimed at leading to “the creation of the necessary climate of certainty for both public and private sector investors.”
The government will also “conduct a sustained campaign against rural and urban poverty and underdevelopment,” he said.
Meanwhile, the South African Chamber of Business welcomed what it says is a shift to the “imperative of economic growth” in Mbeki’s speech.
“We are happy with the detail as well as the strategic intention behind it,” said Sacob chief executive officer Kevin Wakeford.
He said Sacob had been looking for Mbeki to deal with the issue of national unity, and depolarising South African society, which had come across very strongly.
“The second area we were heartened by was obviously the emphasis on economic growth,? he said. – AFP
ZA*NOW
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