News in South Africa 4th October:

1. Water levels critical:

Johannesburg Water has again shut down the supply to the northern suburbs of Johannesburg.

Water levels critical
Image taken by: Luis Quintero

This is the fourth time in less than three weeks.

The emergency shutdown of the Bryanston reservoir and tower is to attend to another burst.

There is no estimated time for completion at this stage.

A number of planned interruptions are also affecting various suburbs around the city.

In a statement, Johannesburg Water warned customers to reduce consumption because reservoirs and towers are still at critical levels.

Areas supplied by the Commando, Soweto, Roodepoort, and Sandton reservoirs are battling dry taps.

2. Food inflation doubles:

Pick n Pay’s food inflation in its half-year to August doubled compared with the same period in 2021, hitting 7.2%, showing just how much pressure consumers are under, even as retailers and food producers try to absorb some of the increases.

The retailer released an update on its earnings for the half-year to August 28, in which it reported a much stronger Boxer performance than that of its Pick n Pay brand, which appears to be struggling.

Pick n Pay is not alone in reporting increasing prices. According to Stats SA, Food CPI rose from 8.6% in June to 11.3% in August. Shoprite also reported that in-store inflation spiked to 7.2% in July, and the group’s CEO says food inflation in stores could reach as much as 10%.

3. Bitcoin steadier than most stocks:

Historically famed for its volatility, bitcoin (BTC) suddenly appears to be a beacon of calm when compared with many marquee stocks that have taken a hammering in recent weeks.

In rand terms, BTC is slightly up over the month of September. In US dollar terms, it is down 3.8% over the month, which reflects the state of the weakening rand. That’s almost on a par with gold’s 3.3% decline over the last month.

Compare that with the Nasdaq, which is down nearly 10% since the beginning of September, or the S&P 500, down more than 8% last month.

Bitcoin’s recent resilience doesn’t amount to a hill of beans over longer time frames, but is seen by some as a sign that the bottom of the current bear market is at hand. It peaked above $69 000 in November 2021 before commencing its 72% dive to around $19 100, where it traded last week.

For the Nasdaq and S&P 500 indices, the declines over the last nine months are 21% and 25% respectively.

You were much safer sticking with stocks during this bear market, but there are fears that the worst may not yet be over for equities.

Crypto has been tracking equity prices in recent months, though that correlation tends to weaken during bull markets. Crypto research firm Glassnode notes that one factor weighing in favour of bitcoin is a growing corps of investors apparently prepared to ride out the fantastic price swings witnessed since its creation in 2009.

“As the evaporation in global liquidity continues, emphasised by new local highs on the US Dollar (DXY) index, Bitcoin has remarkably shown a degree of relative strength,” notes Glassnode in a newsletter to clients last week.

4. New vehicle sales on the rise:

The National Association of Automobile Manufacturers of South Africa’s (Naamsa) New Vehicle Sales stats for September 2022 show a year-on-year increase of 10.8% amid the despondency about load shedding and other weakening economic indicators.

The automotive industry contributes 4.3% to South Africa’s GDP, with the export of vehicles and automotive components reaching a record amount of R207.5 billion – equating to 12.5% of South Africa’s total exports – in 2021.

According to Naamsa, Aggregate domestic new vehicle sales in September 2022 rose to 47,786 units,  reflecting an increase of 4,639 units from the 43,147 vehicles sold in September 2021.

Additionally, Export sales recorded a significant year-on-year increase of 104,6% from 21,199 units to 41,474 units in September 2022 compared to the 20,275 vehicles exported in September 2021.

The total reported industry sales of 47,786 vehicles comprise dealer sales, rental industry sales, and sales to government and industry corporate fleets.

The breakdown of these four segments is as follows:

  • Dealers represented 81.9% of sales, with an estimated 39,152 units sold.
  • The rental industry represented 14.2% of sales.
  • Government sales represented 2.3% of sales.
  • Industry corporate fleets represented 1.6% of sales.

Naamsa noted that the September 2022 new passenger car market had registered an increase of 9,7% compared to new cars sold in September 2021. The car rental industry supported the new passenger car market during the month and accounted for a solid 18,9% of sales in September 2022.

Domestic sales of new light commercial vehicles – bakkies and mini-buses – also saw an increase of 14.9% year-on-year, while medium and heavy truck segments of the industry reflected an increase of 15.3% and 1.8%, respectively.

5. Tourism sector suffering:

South Africa’s embattled tourism sector hopes for a bumper summer season, the first in two years without pandemic-induced restrictions. But the scourge of load shedding and capacity constraints among local airlines dampen expectations.

South Africa expects to welcome an influx of international tourists this upcoming summer. And although the sheer volumes of overseas arrivals are unlikely to recover to pre-pandemic levels, those coming will be spending a lot more.

Although most international travel restrictions have eased and airlines are slowly returning to the skies at frequencies last seen in 2019, South Africa faces a set of specific challenges in luring tourists back. The July unrest did some reputational damage, as do ongoing safety and security issues.

South Africa’s energy crisis is also having a negative impact on tourism and hospitality businesses while, at the same time, giving some would-be visitors second thoughts.

“When looking at the recovery of the industry across the continent, load shedding is placing an additional burden on South Africa’s ability to recover at the same rate,” said Daniel Trappler, senior director of development for Southern Africa at the Radisson Hotel Group, while recently speaking at the Africa Property Investment Hospitality Forum.

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

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