News in South Africa 3rd March:

1. UN condemns Russian invasion:

The UN General Assembly on Wednesday overwhelmingly adopted a resolution that “demands” Russia “immediately” withdraw from Ukraine, in a powerful rebuke of Moscow’s invasion by a vast majority of the world’s nations.

UN condemns Russian invasion
Image taken by: Katie Godowski

After more than two days of extraordinary debate which saw the Ukrainian ambassador accuse Russia of genocide, 141 out of 193 member states voted for the non-binding resolution. 

China and South Africa were among the 35 countries which abstained, while just five — Eritrea, North Korea, Syria, Belarus and Russia — voted against it.

The resolution “deplores” the invasion of Ukraine “in the strongest terms” and condemns President Vladimir Putin’s decision to put his nuclear forces on alert.

The vote had been touted by diplomats as a bellwether of democracy in a world where autocracy is on the rise in countries from Myanmar to Venezuela and came as Putin’s forces bear down on Kyiv while terrified Ukrainians flee.

“They have come to deprive Ukraine of the very right to exist,” Ukraine’s ambassador Sergiy Kyslytsya told the Assembly ahead of the vote.

“It’s already clear that the goal of Russia is not an occupation only. It is genocide.”

Putin launched the full-scale invasion of Ukraine on February 24. Moscow has pleaded “self-defence” under Article 51 of the UN Charter.

But that has been roundly rejected by Western countries who accuse Moscow of violating Article 2 of the Charter, requiring UN members to refrain from the threat or use of force to resolve a crisis.

The text of the resolution — led by European countries in coordination with Ukraine — has undergone numerous changes in recent days.

It no longer “condemns” the invasion as initially expected, but instead “deplores in the strongest terms the Russian Federation’s aggression against Ukraine.”

It also makes clear the United Nations is “condemning” Putin’s decision to put his nuclear forces on alert, a move that ignited an immediate outcry from the West.

Nearly every General Assembly speaker unreservedly condemned the war and the risks of military escalation.

“If the United Nations has any purpose, it is to prevent war,” the US ambassador, Linda Thomas-Greenfield, said during her speech on Wednesday.

2. Oil price rockets:

Oil prices soared Wednesday above $113 (~R1 751) per barrel and natural gas spiked to a record peak, as investors fretted over key producer Russia’s intensifying assault on Ukraine.

European benchmark Brent North Sea oil struck $113.02 per barrel, the highest level since 2014, while New York-traded WTI hit a 2013 peak at $111.50.

Later Wednesday, traders will digest a meeting of OPEC and other major producers, including Russia, who will discuss whether to ramp up output to temper spiking prices that fan inflation.

US President Joe Biden said that country would join a 30-country deal to release 60 million oil barrels to help temper the surge in crude prices, though analysts have warned such moves would have a limited impact.

“The war in Ukraine that Russia is waging with increasing severity is causing oil prices to skyrocket,” said Commerzbank analyst Carsten Fritsch.

Europe’s stock markets however rallied, despite earlier Asian losses, as energy majors won a shot in the arm from crude oil.

Added to the picture, Europe’s reference Dutch TTF gas price rocketed by around 50% to forge an all-time record 194.715 euros per megawatt hour.

UK gas prices jumped to 463.84 pence per therm, close to the record 470.83 pence attained in December.

Elsewhere, Asian equities sank with investors increasingly anxious about the Ukraine war’s knock-on impact on runaway inflation and the fragile economic recovery from Covid.

“Anxiety is again rippling through global financial markets… as the Ukraine conflict ratchets up inflationary pressures and threatens to derail global growth,” noted Hargreaves Lansdown analyst Susannah Streeter.

The crisis has seen numerous countries hammer Moscow with a series of wide-ranging sanctions that have isolated Russia and threaten to crash its economy.

But the main source of unease on trading floors is crude, which has rocketed since Russia began preparing to invade.

3. SA Banks still strong:

South Africa’s banking industry is healthier and stronger than expected and its banks are well positioned for whatever uncertainties and challenges might confront them in 2022. This, in a nutshell, is the conclusion of a study by GCR Ratings into the banking sector.

Vinay Nagar, senior analyst of financial institutions at GCR Ratings, noted several times during a presentation of the research into the finances of the banking industry on Wednesday that the country’s banks are “remarkably healthy”.

“Despite the tough operating conditions over the past two years, the core metrics of capitalisation, liquidity and asset quality remain strong for all the major banks.

“All key indicators have shown an improving trend.”

Nagar warned that there are still risks, the biggest of which are increasing inflationary pressures and the continued low economic growth rate.

“Events of the last week might also exacerbate the economic situation,” said Nagar, referring to the Russian offensive to pull Ukraine back into its fold.

However, he found little to complain about when it comes to SA banks. Noting that banks faced huge uncertainties in 2020 – credit losses increased, with numbers doubling when Covid-19 emerged – the quality of banks’ loan books was better than expected in 2021.

“This will support profitability in 2022.”

A look at the upsides

Nagar listed the main reasons for his positive view:

  • Asset quality has improved with credit losses expected to be well contained between 0.8% and 1% in 2022, while non-performing loans have been reducing. GCR Ratings expects this to decrease further in 2022, to an average of 5% for the industry.
  • Regulatory capital metrics ended 2021 at three-year highs (Tier 1 capital at 15%).
  • Liquidity strength remains intact with a liquidity coverage ratio of above 140%.
  • After the significant dip in 2020, earnings bounced back in 2021. Banks look set to maintain the profit momentum in 2022.
  • An independent and well-run central bank – the South African Reserve Bank (Sarb) – has supported stability through the period of stress.

Nagar said it is encouraging to see that credit losses have been declining from the high levels of 2020, noting that this might be as a result of the major banks focusing on higher income households.

4. Joburg closes licence centres:

The City of Johannesburg says several licensing centres across the city have been forced to close their doors and stop operations due to ongoing protest action.

The city said the protests have flared up due to recent changes made by the Gauteng Provincial Government to driver’s license and testing booking system which blocks third parties from booking services on behalf of individuals or groups.

“The City of Johannesburg Licensing Department and Testing stations have been affected by this protest. This is despite the decision to change the booking system being a directive by the Gauteng Provincial Government.

The province-wide protest action is an attempt by the affected groups of runners and individuals who benefited from the previous practice to get the Gauteng Provincial Government to heed to their demands. The City’s licensing department has unfortunately also fallen victim to the unrest, and centres have therefore been forced to stop operations.”

The closure of our offices and operations has been taken in the interest of preserving the lives of employees and members of the public and to protect property, the city said.

The city said the following licensing centres will be closed until further notice:

  • Midrand Licensing Department
  • Strijdom Park Testing Station
  • Roodepoort City Hall
  • Langlaagte Licensing Department
  • Ormonde Licensing Department
  • Eureka house
  • Region E Licensing Department

5. SAA resumes Durban flights:

South African Airways (SAA) will resume flying between Johannesburg and Durban on Friday, but its fares are easily beaten by competing domestic airlines.

It’s been around two years since South Africa’s flag carrier last transported paying passengers between Johannesburg’s OR Tambo and Durban’s King Shaka International Airport. Amid a bitter business rescue process and the global Covid-19 pandemic, which halted air travel, SAA’s wings have remained clipped for much of the past two years.

The airline only resumed operations in September after identifying a strategic equity partner, Takatso Consortium, which would own 51% of SAA. That deal was only recently concluded.

In the meantime, SAA, with a much leaner fleet, has been flying to several destinations. Since exiting business rescue, the airline has added routes to Accra, Kinshasa, Harare, Lusaka, Lagos, and Mauritius. By February, SAA had completed 1,000 flights.

But long-haul overseas routes remain scarce and, domestically, SAA has only focused on flights between Cape Town and Johannesburg. The reopening of its Johannesburg-Durban route signals SAA’s second flight path within South Africa, more than five months after returning to the skies.

“The short-haul route between Johannesburg and Durban is one of the busiest in South Africa, and our customers and partners have been asking us to fly this route since we took to the skies again in September 2021,” said SAA’s Interim Chief Executive Officer Thomas Kgokolo.

All information sourced from articles posted by: ENCA, Fin24, Moneyweb, BusinessTech, and Business Insider.

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