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Market Commentary | The week that was

South Africa greylisted by FATF: The Financial Action Task Force (FATF), a worldwide anti-money laundering agency, has placed South Africa on its greylist. This follows the country’s failing to sufficiently address illicit financial flows through necessary legislation and actions to prevent potential money laundering and terror financing. South Africa and Nigeria were included in the "high-risk and other monitored jurisdictions" category. When the FATF places a jurisdiction under heightened monitoring, it indicates the government of that country has committed to resolving identified strategic shortcomings as soon as possible within agreed deadlines.

Godongwana’s Eskom plans confirm De Ruyter’s allegations of entrenched corruption: Shortly after Finance Minister Enoch Godongwana delivered a fairly credible budget in parliament, demonstrating that National Treasury has a firm hold on the country's finances, Eskom CEO André de Ruyter was fired for openly claiming that corruption was entrenched in the government. One of the budget's key highlights was the government's absorption of R254 billion in Eskom debt, which restored the utility's going concern status and allowed it to focus more on fixing its underperforming power plants. However, this will be impossible in an Eskom where - as De Ruyter has claimed last Tuesday in a TV interview - R1 billion is being stolen every month. Yet, there was a subliminal indication that National Treasury is aware of the issue, which is clear from one of the two terms associated with the debt assumption.

An international group with considerable knowledge in operating coal-fired power plants has been hired by National Treasury to examine all of Eskom's coal-fired units and offer recommendations for operational enhancements. The review should be finalised by mid-2023.The operational suggestions resulting from this review must be carried out by Eskom. After implementing these suggestions Eskom “must concession all these power stations with clear targets for the electricity availability factor and operations”.

Twitter continues to cut jobs to reduce costs: Late last Saturday - in a new round of cost-cutting measures -Twitter fired additional employees. According to those familiar with the matter, the layoffs affected personnel on teams across the organisation, including staff in engineering and production departments. Some employees received a termination email late Saturday, while others tweeted that they have only discovered their termination after they were unable to access the company's internal system.

Markets: On Friday, South Africa’s rand fell against a stronger US dollar, as the Financial Action Task Force (FATF) added South Africa to the greylist. On Monday (27 February), the rand was trading at R18.44/$, R19.45/€, and R22.03/£. Brent crude was trading at $82.95 a barrel.

Looking at the week ahead: South-Africa’s balance of trade data will be released during the week. The trade balance is likely to reflect a declined in January from December 2022, partly due to seasonal effects. Employment figures, as captured in the 4Q22 Quarterly Labour Force Survey (QLFS) data, are also due for release this week, and is expected to reflect an ongoing recovery. Furthermore, China will release NBS Manufacturing PMI data and the Eurozone will release the Core Inflation Rate YoY.

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