South African Stocks Halt Loss Ahead of BRICS Summit
The benchmark JSE/FTSE Top 40 index closed Monday’s trading session 0.98% higher, ending a six-day losing streak a day before the 15th BRICS summit kicks off in Johannesburg on Tuesday.
The South African government will host Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and Brazilian President Luiz Inácio Lula da Silva, while Russian President Vladimir Putin will be participating virtually. A potential expansion of the group is expected to be the key topic during the three-day summit.
“Any expansion of the BRICS grouping could determine the speed with which the bloc adopts commercial and financial systems outside of the dollar sphere. Speculation is rife as to how many countries, if any, will join the club – for the first expansion in a decade,” ING wrote in an Aug. 17 note.
“Experts, however, warn that friction between China – a proponent of expansion – and the more reticent India makes the subject highly uncertain.” Speaking of China, the Chinese central bank cut the one-year loan prime rate by 10 basis points to 3.45% and retained the five-year loan prime rate at 4.20%.
Market analysts were expecting the People’s Bank of China to lower both rates by 15 bps as the country’s post-COVID-19 economic rebound loses steam. >>> Nigerian Treasury Bills Yield Rises to 7%
“The big puzzle is that the five-year LPR rate was steady, at 4.20%, given that it is the benchmark for mortgage rates and the property market is especially under pressure. The likely reason is existing home mortgage repayment pressure,” Pantheon Macroeconomics said.
“The PBoC is leaning on banks to allow refinancing of high-interest rate mortgages, but legally this is a contract between the bank and the borrower, and many banks are reluctant to lose a good asset. Lowering the five-year LPR rate would only increase the existing mortgage repayment pressure,” according to Pantheon.
Back at home, the South African Reserve Bank determined that President Cyril Ramaphosa’s Ntaba Nyoni Estates has no “legal entitlement” to the foreign currency allegedly stolen from the president’s Phala Phala farm in February 2020, citing the lack of “perfected transaction.”
The central bank noted that the private internal report resulting from the one-year investigation will not be made available to the public. South African Stocks Halt Loss Ahead of BRICS Summit
