President Cyril Ramaphosa has secured a second term after the African National Congress (ANC) formed a coalition

The ANC lost its majority in the May election, securing only 40% of the vote, ending its 30-year dominance. This necessitated a power-sharing agreement to form a government of national unity. Ramaphosa expressed gratitude and a commitment to his role. The coalition marks a significant shift in South African politics, emphasising unity and cooperation. The new National Assembly includes 159 ANC and 87 DA members. Despite the DA’s pro-business stance, which appeals to investors but not to many ANC supporters, the coalition aims to address economic challenges and improve living conditions for all South Africans.

Source: Sky news

Smelter set for R1.8 billion revival with new ownership investment

The Metalloys smelter in Meyerton, once a crucial economic hub producing around a million tons of manganese alloys annually and supporting over 700 jobs, is set for a revival through a new R1.8 billion sales deal. The smelter, part of the Samancor manganese joint venture managed by South32 (60% shareholder) and Anglo American (40%), has been closed since 2020. The new ownership group, which includes Mcebisi Jonas, plans to invest over $100 million to rejuvenate the facility. This investment brings hope for restoring operations and revitalizing the local economy in the small Gauteng town.

Source: News24.com

World Bank projects stable global growth amid geopolitical tensions and inflation

Global growth is projected to stabilise at 2.6% this year, despite geopolitical tensions and high interest rates. The World Bank has revised its 2024 forecast to 2.6%, up from 2.4%, largely due to a more optimistic outlook for the U.S. economy.

Source: World Bank

Federal Reserve signals one rate cut in 2024

The Federal Reserve opted to keep interest rates unchanged, signalling a shift to a more conservative stance with expectations now set for just one rate cut in 2024 (down from three projected in March). Fed Chair Jerome Powell cited ongoing economic stability and modest progress towards inflation targets, despite recent lower-than-expected CPI figures. The decision reflects a cautious approach to future monetary policy adjustments, aiming to sustain economic growth while managing inflationary pressures.

Source: Reuters

Market moves

Telkom, South Africa’s third-largest telecom company, reported a 201% increase in headline earnings for the full year ending in March. The rand strengthened against major currencies ahead of President-elect Cyril Ramaphosa’s inauguration, trading at R18.27 to the dollar, R23.19 to the pound, and R19.57 to the euro on Tuesday. Oil prices are at $84.12 per barrel.

The week ahead

South African inflation figures will be released on Wednesday. Several key companies are scheduled to release their reports, such as Dis-Chem Pharmacies Ltd, Gemgrow Properties Limited, Barloworld Ltd, as well as Vodacom Group Ltd. Markets remain uneasy due to the uncertain outcome of the French elections. Investors are monitoring US inflation data as pressures appear to be easing. In the UK Consumer Price Index and Monetary Policy summary are expected this week.

Market Performance as at 14 June 2024

Source: FundFocus. Data as at 14 June 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.