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Market Commentary | The week that was

Toyota plans to produce electric vehicles in South Africa: Toyota South Africa Motors (TSAM) intends to manufacture electric vehicles in SA and export them to global markets. To improve the feasibility of this project, Government needs to complete its new energy vehicle (NEV) policy and a response on how it will be able to support TSAM, said CEO Andrew Kirby. This is essential to the company's sustainability as 44% of TSAM's products is exported to Europe and the company cannot afford to lose that market share.

EFF planning a national shutdown: The Economic Freedom Fighters (EFF) Party says it will organise a national shutdown on 20 March to protest the continuing of load shedding and insist on the resignation of President Cyril Ramaphosa. EFF leader Julius Malema said the increasing cost of living, high levels of poverty, unemployment and crime levels are additional causes for the planned nationwide shutdown. Malema also said the strike may have an influence on schools, businesses and factories. Following discussions last week, the EFF has decided to sever all relations with the Inkatha Freedom Party (IFP).

Chinese consumers are finally opening their wallets: After a depressing fourth quarter, China’s consumption recovery from zero-Covid is getting off to a strong start. In 2022, China's economic growth rate was one of its slowest in decades. Catering sales fell by a sharp 6.3% and retail sales were 0.2% lower at 43.97 trillion yuan ($6.28 trillion). According to current statistics Chinese consumers are beginning to reopen their wallets, particularly for tourism and travel. Throughout the course of the seven-day Lunar New Year holiday, which ended on Friday, national tourism earnings increased by 30% from the previous year to 375.84 billion yuan, however, it still fell short of what was spent in 2019.

Bitcoin: On the assumption that monetary tightening and the cryptocurrency sector crisis are both abating, bitcoin is expected to have its best January since 2013. Since the year began, the largest token has increased by more than 40%. As part of a $280 billion increase in digital assets overall in January, smaller coins like Solana, Axie Infinity, and Decentraland have seen their value double, according to CoinGecko data.

Markets: The rand stabilised on Friday after losses a day prior when the South African Central Reserve Bank (SARB) increased interest rates less than predicted. Thursday’s result suggests SA has reached its interest rate peak or that there might be one more 25-bp raise left in the hiking cycle that started in November 2021. On 30 January, the SA rand was trading at R17.28/$, R18.69/€, and R21.31/£. Brent crude was trading at $86.37 a barrel.

Looking at the week ahead: This week’s key data releases include the trade and budget balances and private sector credit extension for December 2022, as well as the vehicle sales and Purchasing Managers’ Index (PMI) for January. Interest rate decisions of the US Federal Reserve (FED), European Central Bank (ECB) and Bank of England (BOE) will also be released. Other data to be released includes the Eurozone’s Consumer Confidence Index (CCI) and Gross Domestic Product (GDP). In the US the employment cost index, MNI, Chicago PMI and the Conference Board Consumer Confidence Index will be released.

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