03 May.
Economic review of 25 to 29 April and preview of 2 to 6 May 2011.
- The rand held firmer on low risk aversion and higher precious metal prices.
- Growth in bank credit extension and money supply was slower than expected in March.
- Producer inflation rose in line with expectations to 7,3% y-o-y in March, driven by higher commodity prices.
Comment
The rand was firmer last week on lower risk aversion and higher precious metal prices. The unit closed at R6,56, R9,71 and R10,96 on Friday against the US dollar, the euro and the British pound respectively, up from R6,71, R9,76 and R11,06 on Thursday the previous week.
Bonds were generally steady on thin trade due to public holidays. The yields on the benchmark R157 2015 and the R186 2025 edged up to 7,64% and 8,65% respectively from 7,63% and 8,64%. The 3- and 5-year BESA actuaries increased marginally to 7,03% and 7,80% from 7,00% and 7,77%, while the 10-year BESA actuaries were steady at 8,47% during the review period.
Money market rates were also steady, with the 12-month JIBAR unchanged at 5,50% throughout the week, while the 6-, 9- and 12-month JIBAR edged down slightly to 5,76%, 8,98% and 6,25% from 5,79%, 5,99% and 6,26% respectively.
Activity in the local equity market was limited by public holidays. However, equities in general were supported by firmer global markets during the week, with the FTSE-JSE all share index ending at 32 836,2 on Friday, up by 0,5% from 32 658,9 at the previous week’s close. Both industrials and financials gained 2,1% during the period to end at 33 227,6 and 22 006,0 respectively on Friday. However, basic materials lost 1,6% to close at 31 694,0.
Growth in bank credit extension remained subdued at 5,1% y-o-y in March from 5,4% in the previous month, falling well short of market expectations of 6,1%. Households continued to drive the moderate recovery in credit, with loans rising by 0,8% m-o-m and 7,4% y-o-y in March, up from 7% in February. In contrast, corporate demand remained weak, with loans falling by 0,6% m-o-m in March, keeping the annual increase little changed from February at only 2,7% y-o-y. In the first quarter, household credit rose at an annual rate of 9,7%, while corporate credit edged up at an annual rate of only 3,7%. The recovery in mortgage demand appears to have stalled, with growth in advances moderating further in March. Mortgages grew at an annual rate of only 1,5% q-o-q in the first quarter. More encouragingly, growth in instalment sales and leasing finances accelerated further in March in line with continued recovery in the demand for both new and used motor vehicles. Instalment sales and leasing finances rose at an annual rate of 6,7% q-o-q in the first quarter. The ‘other loans and advances’ category also continued to climb higher, jumping by an impressive 16,5% q-o-q in the first quarter of this year. The bulk of this acceleration come from a sharp increase in unsecured loans to individuals rather than in corporate credit, which remained very subdued. …
Source: Nedbank
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