Marketing Commentary | The week that was
No new borrowing, bailouts to support Eskom: Minister of Finance, Enoch Godongwana said that despite a gloomy International Monetary Fund (IMF) forecast and a decline in the final three months of 2022, South Africa would not enter a recession this year. The most developed economy in Africa is experiencing a severe power crisis due to state-run Eskom's declining capacity to supply electrical demand. The IMF has downgraded its growth projection for 2023 and now only expects a 0.1% growth rate. Godongwana confirmed that the state would not offer additional bailouts to Eskom, notwithstanding the new electricity minister telling Reuters last week that the country should invest boldly in resolving the situation.
Load shedding advanced to Stage 7: Eskom silently implemented Stage 7 power cuts last week. Eskom removed more than 7 000 MW of electricity from the system. They said the overall demand for the evening was 30 747 MW, but it only had 23 771 MW available, causing it to lose 7 072 MW in a Thursday update on-demand statistics. This is despite the update noting the load shedding status as "Stage 6 and load shedding curtailment Stage 4". According to Eskom's definition, a 7 000 MW grid cut results in Stage 7. Friday afternoon, Eskom responded by denying that Stage 7 is implemented. Instead, it claimed that it had implemented Stage 6 load shedding.
Silo Hotel needs R30.6m in repair work. However, the V&A Waterfront owners do not believe it is necessary: Following the failure of screeding on the hotel's solid floor slabs, more remedial work at the Silo Hotel at the V&A Waterfront in Cape Town will be necessary. This work is expected to cost R30.6 million in current value, including losses associated with the building being out of commission during the progress of the work. The Silo Hotel also previously had to close for five months while temporary work was done; the remedial work cost roughly R6 million.
Markets: The rand was under pressure throughout Monday as the dollar rallied. On Monday, 17 April, the rand was trading at R18.06/$, R19.86/€, and R22.44/£. Brent crude is trading at $86.28 a barrel. Despite being on a rate-hiking cycle, a Fed official said that the U.S. central bank had made little headway in returning to its inflation target of 2% and would need to move interest rates higher still.
Looking at the week ahead: Data to be released this week, South African CPI, and retail sales. Companies announcing results are Capitec, ABSA, Clicks, and Thungela Resources.