Financial News Daily – Friday Wrap
What to make of the U.S. Federal Reserve increasing interest rates? It might seem distant, but a rate hike like this has far-reaching effects. We want to look at what it is going to do to the rand, the currency in South Africa. We want to look at how it will affect the governor of the Reserve Bank of South Africa regarding interest rate hikes or further interest rate hikes. We’ll just briefly touch on that.
The other interesting item was that Canada is going to be made a member of the European Union. This is for economic reasons and to show solidarity with Canada because it has been excluded and targeted by the United States, namely under the president of the United States. It’s interesting, but it also seems to make sense because there are a lot of French speakers in Canada, for one, so they still have a language commonality between Canada, for example, and France and other French-speaking areas such as Switzerland and parts of Italy. A lot of new alliances are taking shape.
The U.S. president is unhappy once again about a move like this and is playing tit for tat. It’s an ongoing tit-for-tat game here in South Africa too. The United States has also singled out public officials responsible for illegal expropriation of land. This is not going to go down well in South Africa, and this tit-for-tat game is just going to continue with the real issues not being addressed.
Right, let’s move on to business, highlighting some of the important developments during the week, and then we’ll touch on a few lighter issues before you go.
South Africa: economic, financial and business highlights
The Fed and South Africa: What It Means for the Rand and the Reserve Bank
The US Federal Reserve raised its benchmark rate by 25 basis points to 3.75%–4.00%, its first increase since 2023, and its projections point to another increase this year. The rand weakened after the announcement, reinforcing the pressure on emerging-market currencies when US returns become more attractive.
The immediate issue for South Africa is next week’s Reserve Bank decision. The MPC has to weigh the weaker rand and inflation risks against an economy that contracted 0.2% in the second quarter.
Canada, Europe and the New Alliance Game
The European Commission has proposed that Canada become the EU’s first associate member, while also deepening cooperation in trade, defence, critical minerals, energy and technology. It is a striking example of the way old alliances are being supplemented by new economic and strategic relationships.
That matters to business because alliances are no longer simply about diplomacy. They can influence where companies source, manufacture, invest, sell and obtain technology.
Washington has also imposed visa restrictions on South African officials, accusing them of involvement in what it describes as race-based discrimination and uncompensated land seizures. South Africa rejects the allegations.
A changing world order – and why business should care
A new analysis from Boston Consulting Group puts some numbers behind the changing international order. Its BCG Institute Power Index uses more than 50 indicators covering economic, military and soft power to examine how power is being redistributed and how alliances can rapidly alter the balance.
For business leaders, the implication is practical: changing alliances can affect market access, supply chains, technology choices and investment decisions. Companies may increasingly have to stress-test their strategies against several possible geopolitical configurations rather than assume that today’s trading relationships will remain intact.
Companies and Deals
Omnia Holdings: India’s Solar Industries has made a R21.8 billion all-cash offer for Omnia at R134.50 a share, in a deal that would take the agriculture, mining and chemicals group off the JSE and A2X.
Premier Group: Premier expects earnings to rise by 22%–32% in the six months to September, with revenue forecast to increase by 35%–45%, helped by the RFG Holdings acquisition. The company has also commissioned a new bakery in Middelburg capable of producing 8,000 loaves an hour.
Momentum Group: Momentum’s normalised headline earnings rose 13% to R7.06 billion for the year to June, taking it past its R7 billion target a year earlier than planned. The group is now looking at acquisitions to expand its financial-adviser network.
Sasol: Sasol is moving further into sustainable aviation fuel, with fuel partly made from used cooking and vegetable oils set to power White Desert’s tourist flights from Cape Town to Antarctica. The first Sasol-powered flight is expected in November.
Tourism: South Africa’s first Club Med resort has opened at Tinley Manor in KwaZulu-Natal after an investment of more than R2 billion. The development has created 600 permanent direct jobs and is expected to support a further 1,500 indirect jobs.
Sanlam: Sanlam has received regulatory approval to offer transactional banking services through its partnership with GoTyme. Beta testing is planned for the second half of 2026, followed by a phased public rollout in early 2027.
Economic Backdrop
Inflation eased to 4.3% in July from 5% in June, although fuel prices, the weaker rand and fertiliser costs remain risks.
GDP contracted 0.2% in the second quarter, with manufacturing down 1.8%. The figures underline how little room the Reserve Bank has to respond to external inflation pressure by simply following the US higher.
Birthdays – September 18
Musicians:
Dee Dee Ramone (1951) – Founding bassist of the Ramones.
Kerry Livgren (1949) – Guitarist and principal songwriter for Kansas.
Frankie Avalon (1940) – Singer and actor who became a teen idol in the 1950s.
Authors:
Samuel Johnson (1709) – English writer and lexicographer.
Steven Pinker (1954) – Canadian cognitive psychologist and author.
Light Jokes
My wife told me I should stop buying random stuff online. I told her I was just browsing. She said, “You’ve been browsing for three hours.” I said, “Yes, but I’m very thorough.”
I told my boss I needed a raise because three companies were after me. He asked which ones. I said: “The bank, SARS and my landlord.”
I finally organised all my passwords. Unfortunately, I can’t remember where I put the list.
Weird and Wonderful
Most of the iron in your blood was forged inside stars before the solar system existed.
The first computer mouse, demonstrated by Douglas Engelbart in 1968, was made of wood.
An octopus has three hearts – two pump blood to the gills and one pumps blood around the body.
Deep Thought
“Leaders should be ready to respond to rapid shifts in global power by stress testing their organisations’ global strategies.”
— Boston Consulting Group
Quiz Question
What was unusual about the soldiers who manned Hadrian’s Wall?
A. They were all Roman citizens
B. They were recruited mainly from Britain
C. They came from across the Roman Empire
D. They were retired legionaries
Quiz answer: C. They came from across the Roman Empire.
Soldiers stationed along the Wall included men from places as far afield as modern-day Syria, Romania and North Africa.
