Economy & Business News - 08 April 2024

08 Apr 2024

ECONOMY & BUSINESS

• The JSE All Share Index at the end of March is unchanged from the first trading day of the year (2 January), as is the JSE Top 40. Financial shares – since mid-2023 often recommended by brokers and advisors for offering value – did not live up to expectations and declined by 5% in the first quarter, as measured by the financial index. Gold shares were the only solid winners on the back of a 32% increase in the gold price to new records during the three months to end March. In addition, the increased prices of gold shares come off a high base following the strong surge in the gold sector during 2023. (Source)

• The electric vehicle market is expanding in South Africa, and with that comes a wide range of options for consumers. There are nine different electric vehicles (EVs) in South Africa that can drive more than 500km on a single charge, but they aren’t cheap. Over the last few years, the price of EVs has dropped significantly due to the entry of new brands, such as BYD and GWM’s Ora, into the market. Well-established brands like Volvo have started to offer more affordable EV models. However, the cost of purchasing an EV with a driving range of 500km or more is still prohibitively high. To get an EV that can cover such distances without requiring frequent charging, you will need to spend at least R1.3 million. (Source)

• S&P Global PMI South Africa. South African firms faced a renewed decline in business conditions during March after showing signs of stabilising in February. New order volumes fell at the sharpest rate in over two years, as stronger price pressures and drought conditions contributed to lower customer demand. The downturn resulted in a sharper reduction in private sector output. Nevertheless, staffing and inventories continued to expand. Firms also pointed to an easing of supply side delays, amid reports that the port crisis in Durban was calming down. Price pressures quickened in March, with firms reporting higher supplier charges and fuel costs. Output price inflation subsequently lifted to a five-month high. (Source)

• Multimodal rail terminal at Durban port was launched by the port logistics company Newlyn Group. It is strategically located next to the Port of Durban, aimed at opening intra-Africa and local trade and investment opportunities. The rail terminal development, currently valued at R3.4-billion, facilitates the movement of sea, rail and road cargo through a multimodal hub to assist with the handling, storage, loading and movement of a variety of cargo types, including hard and soft commodities in bulk and breakbulk, containerised cargo and project cargo. Prior to this, there was no large-scale rail- and road-connected facility of sufficient scale and proximity to the Port of Durban to manage the high level of flow of cargo by sea, road and rail traffic needed to unlock the North and landlocked Southern African trade corridors, Newlyn said. (Source)

• Tesla has begun production of right-hand-drive cars at its plant in Germany for export to India later this year, as it moves ahead with a possible entry into the world’s third-largest car market. A team from Tesla is expected to visit India later this month to look at sites for a local car manufacturing plant that would require an investment of about $2bn. (Source)

• Governor Kganyago reiterated his view that a lower inflation target would improve South Africa’s competitiveness. The Governor made his remarks in an interview with Reuters, adding that he would prefer that an announcement to lower the target be made before 2025. He noted in that officials at the SARB and the National Treasury were currently engaged in technical work around identifying an appropriate target, including a timeline for reaching it. In its macroeconomic policy review published alongside the 2024 Budget in February, the National Treasury also recommended that further technical work be conducted to investigate an appropriate inflation target for South Africa given the differentials with trading partners. (Source)

• Electric vehicles. Tesla delivered just under 387 000 vehicles this year to March, 8.5% lower than the same period last year and 20.2% below the previous quarter. Analysts had expected a figure of around 454 000. Growing competition from the new EV-makers, especially Chinese ones, partly explains the slump. Shares in the American firm have dropped by almost 30% this year. (Source)

• The seasonally adjusted Absa Purchasing Managers’ Index (PMI) slipped back to below 50 points in March 2024. The headline index declined from 51.7 in February to 49.2 in March. The PMI has been choppy in recent months, but the average for the first quarter of this year is equal to the final quarter of last year. In the fourth quarter, the gross value added by the sector managed to eke out a 0.2% quarter-on-quarter expansion, with a more robust annual increase. The PMI generally suggests a similar experience is possible in the first quarter. (Source)

• New Vehicle Sales.  Naamsa said that the constrained business environment amplified by weak consumer demand and the recent Easter holidays have impacted on the new vehicle market’s performance in March 2024. Aggregate domestic new vehicle sales in March 2024, at 44 237 units, reflected a decline of 5 877 units, or a fall of 11.7%, from the 50 114 vehicles sold in March 2023. Export sales recorded a decline of 8 975 units, or 27.1%, to 24 161 units in March 2024 compared to the 33 136 vehicles exported in March 2023. Overall, out of the total reported industry sales of 44 237 vehicles, an estimated 39 016 units, or 88.2% represented dealer sales, an estimated 6.0% represented sales to the vehicle rental industry, 3.5% to government, and 2.3% to industry corporate fleets. The March 2024 new passenger car market at 26 577 units had registered a decline of 5 024 cars, or a loss of 15.9%, compared to the 31 601 new cars sold in March 2023. Car rental sales accounted for 7.8% of new passenger vehicles sales during the month. Domestic sales of new light commercial vehicles, bakkies and mini-buses at 14 870 units during March 2024 had recorded a decline of 672 units, or a loss of 4.3%, from the 15 542 light commercial vehicles sold during March 2023. (Source)

• The volume of rail and port cargo handled in South Africa has declined significantly over the past few years, with the country’s ports now ranking among the worst in the world. Financial services firm PwC revealed this in its South Africa Economic Outlook for March 2024, which focused on the country’s stagnant productivity. The firm said that reliable infrastructure is the foundation of any modern economy and is a significant contributor to worker productivity. Reliable infrastructure and well-maintained equipment can boost productivity, while a lack of adequate infrastructure investment will weigh heavily on productivity. In the case of South Africa, capital investment declined every year from 2016 to 2020, while capital formation contributed just 0.5%, on average, of the country’s real GDP growth in 2021-2023. (Source)