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Market Commentary | The week that was

Significant progress at Kusile: A positive outcome after Eskom COO Jan Oberholzer traveled to Japan to secure a key undertaking from power station boiler contractor Mitsubishi. Now the fire-damaged Unit 5 at Kusile power station will be repaired three months earlier than projected. Engineers are attempting to fix the 800-megawatt Unit 5 by July, which was initially scheduled to be completed in October.

Transnet is looking for the right partners: Transnet is a major driver of the country’s economy. The state-owned business that owns and operates South Africa's ports and freight rail network is increasingly turning to private partners to help it expand and enhance its operations. In response to queries, the company said it is considering establishing a rolling-stock leasing firm to allow private entities to utilize its rail network, as well as outsourcing the operation of a planned dry bulk terminal at Richards Bay on the east coast. They are also making progress with plans to pick a partner to assist it in running Africa's largest container terminal in Durban.

The local currency traded at R18 against the dollar: The rand fell on Monday as rating agency Moody's warned of the dangers of the load-shedding power outages, while the dollar strengthened on investor bets that the US Federal Reserve will maintain a restrictive monetary policy for longer. At the end of last week, Moody’s said in an issuer comment on South Africa: “the (power) blackouts’ effect on businesses, consumer sentiment, and investment will weaken the country’s already subdued economic growth prospects and threaten social and political stability”. This year has seen scheduled power outages every day, following a record number of disruptions in 2022. President Cyril Ramaphosa declared a national State of Disaster over electricity shortages last week, granting the government new powers like the ability to conduct emergency procurement procedures.

Markets: South Africa’s markets closed in the red and the rand was little changed on Friday after President Cyril Ramaphosa’s declaration of a state of disaster to tackle crippling power shortages in the country failed to elicit investor confidence. Analysts said the President’s response to the crisis did not impress them, with no clear end in sight to the hours of daily power cuts that have hurt businesses across all sectors and hammered economic growth. The UK market finished weaker on Friday, amid fears over rising interest rates and led by losses in retail sector stocks. On Monday (13 February), the rand was trading at R17.95/$, R19.14/€, and R21.62/£. Brent crude is trading at $85.48 a barrel.

Looking at the week ahead: SA January 2023 inflation date will be released as well as US CPI data. Earnings data release from The Coca-Cola Company, Airbnb, DoorDash, Marriott International, Cisco Systems, and Paramount Global, among others.

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