The revelation at the Nugent enquiry that the South African Revenue Services (SARS) may be more than R200bn short of its revenue targets in the current financial year is very disturbing because it makes further tax increases inevitable. We have already had an increase in the marginal tax rate to 45% and a 1% increase in VAT. These will most probably be followed by another jump in VAT to 17% or 18% and maybe increases in personal and company tax. Read More
The following two charts show the rand and the JSE Overall index over the same period – from 24th June 2013 up to today. The relationship between them is instructive.
In our Confidential Report of June 2018 published a week ago, we said the following:
“In our estimation, the rand could weaken all the way back to the upper channel line – which would be at around R13.50 to the US dollar.”
Since then the rand has weakened markedly, mainly because of dollar strength and the “risk-off” attitude which currently prevails among overseas investors.
This sentiment is nothing to do with South Africa and it has impacted on the currencies of all emerging economies. For example, the Brazilian real has weakened 13% over the past month against the US dollar while the rand is off 9,5% and the Mexican peso has weakened 14%. Read More
The progress of the world economy is predicated by what happens in America. If the US economy is thriving, then we are all doing well. Europe and the East (China and Japan) take their lead from America. With a $20 trillion economy, they are the largest unified economy in the world. Europe is slightly bigger – but nowhere near as homogenous. China and Japan are each roughly one third of the size of America – with China being the larger of the two.
Right now, the US economy is doing very well. This can be seen from the steady improvement in their unemployment rate, which has now fallen to a low of 3,8%. It has only been as low as this twice since World War II – in 1969 (3,4%) and again in 2000 (2,7%). Read More
President Ramaphosa has been fortunate that his two main opposition parties for the 2019 election have been busy shooting themselves in the political foot. The DA’s extraordinary handling of Patricia De Lille now threatens to lose them their anchor support among the coloured people of the Cape Province. At the same time, Ramaphosa’s shrewd move to annex the EFF’s primary populist appeal in the area of land expropriation has forced that party to the extreme left where it has become blatantly and overtly racist in its message and at the same time made absurd suggestions about all land in South Africa reverting to the government on some basis. In the meantime, under Ramaphosa’s leadership, the ANC has been looking more and more like the balanced party of reason and common sense. An increased majority in 2019 will entrench Ramaphosa for the next ten years. Read More