SA Reserve Bank - SA Stocks
SA Gold stocks would benefit from rate cut, but does not appear this will happen. See story below.
As mentioned heretofore, my cynical opinion is that SARB will not lower rates until most of the BEE deals are done at these lower valuations, many should be done by year end or shortly thereafter. Then I would think that SARB will cut interest rates aggressively to the benefit of all those HSDA's (historically disadvantaged S Africans).
A primary beneficiary would be ANO/ARQ which appears to be very undervalued. My belief is ANO will be acquiring platinum and/or gold producing properties via a BEE deal within the next 60 days. Such a deal will generate cash flow to ANO since I believe the property acquired is likely to be profitable at todays SA Rand exchange rate. Just my opinion.
Here is SARB interest rate story:
No change in rates expected
Helmo Preuss | Johannesburg, South Africa
08 December 2004 13:12
A two-day meeting of the South African Reserve Bank's (SARB) monetary policy committee (MPC) started in Pretoria on Wednesday morning with two-thirds of economists surveyed seeing no change in the current 7,5% repo rate, but a third expecting a 50 basis-points cut.
The no-change forecast is despite the fact that CPIX inflation (headline inflation excluding mortgage costs) has been below the midpoint of the SARB's inflation target range of 3% year-on-year (y/y) to 6% y/y for 11 out of the past 13 releases. The exceptions were 5% y/y in June this year and 4,8% y/y in February this year.
The economists expecting no change base their forecast on the high economic growth -- the third-quarter growth rate of 5,6% quarter-on-quarter seasonally adjusted and annualised was the highest since the first quarter of 1996 -- and surging M3 money supply growth, which rose by 15,72% in the year to the end of October from 14,7% in the year to the end of September.
Credit extension to the private sector grew at a rate of 10,21% y/y in October from 8,23% y/y in September.
The economists expecting a rate cut say that the SARB only has an inflation target, and secondary indicators such as economic growth and money supply are only relevant if they have an impact on inflation.
They point to the slowdown easing in unit labour costs, as well as the December drop in the retail petrol price, which indicate that inflation pressures are easing. |
