This is a platform where we dissect everything occurring in the realm of economics .If you looking for place a where constructive and structured perspectives dwell, one should never shy away from this land
Friday, February 12, 2021
Copy of HE President Cyril Ramaphosa SONA on 2021/02/11
Wednesday, December 2, 2020
ETFs VS ETNs
Exchange Traded Funds VS Exchange Traded Notes
The difference between the two instruments that confuses many as they both track the performance of a group or basket of shares, Bonds or Commodities. So, exchange traded funds or ETF as widely known, is an listed investment instruments that track the performance of a basket of shares, bonds or commodities while exchange traded notes are debt instruments that track(only when they are sold or bought or at maturity) the performance of interest rate, commodity prices, basket shares, bonds or currency.
Exchange Traded Funds
This involves the process of collection securities-such as stocks-that often tracks an underlying asset that they hold or index. Like stock, ETF is traded on exchange and its price fluctuate throughout the day. This is considered to be the most preferable and popular choice for diversification as there are multiple assets within the ETF. They provide investor with lower average costs since it would more expensive for investor to put his funds in the stocks held in ETF portfolio individually and create a portfolio by investing funds assets that have already been indexed e.g ETFSA spreading Mr Jones investment between All Share Top40. SA government bonds, Russell 2000 Small Cap Index, this means you invested in different local stock, local risk free instrument and different international stocks. Investors are not shareholders but rather ETF holders. Like stocks, ETF holders receive dividends from the companies that pay dividends and are entitled to the proportion of the companies’ profits. In case of liquidation, the investors may get residual value.
Important features
Exposure to a variety of underlying instruments
Can be traded quickly at a low cost
In SA, ETFs are regulated by JSE & FSCA
Pay dividends, profits or residual value in case of liquidation
Exempt from securities transfer tax
Price fluctuations
Exchange Traded Notes
This is the lending version of the ETFs, instead of investing your funds, investors lends money to the issuer of the ETN, usually a bank, and then receives a return based on the movements in a specific benchmark. Benchmarks can be based on interests rate, commodity price, basket of shares, bonds or currency hence it is just ETF with specific features of a debt instruments. It works like bonds, it can be held to maturity or sold or bought at will because imagine if the underwriter was to go bankrupt, then investor suffers a risk of complete default. ETNs only pay investors once the fund matures based upon the price of assets or index. There Is no pitfall of tracking error because the fund in fact isn’t actively tracking. As an economic theory, the market forces will cause the fund to track the underlying instrument.
Important Features
More cost-effective
Highly liquid
Daily market fluctuation exposure
Pays the amount on the assets or index at maturity or when sold or bought.
Most investors choose to put their funds in ETFs because they are easy to discern hence, they are exponentially bigger in collective volume than ETNs. ETNs require an extended length when conducting a research because of the degree of risks attached to them. Example. Disregarding the credit risks aligned with certain assets especially credit ratings will provide you with almost no insight into whether the as an investor I will be paid at maturity or not because investor needs to know about the probability of a default attached to a security. One should never undermine the efficiency of ETNs because they have favorable tax treatment for long-term investors. With ETFs, the fund may underperform the index due to expenses that may bring a certain degree of differential or divergence from the index they track.
The advise is simple, as an investment phenomena put your money on what you understand.
Tuesday, December 1, 2020
Looking at inflation rate released by STATSSA
Earlier last week STATSSA announced that the Headline CPI went up to 3.7% hitting the highest record since 4.1% penned in March this year. The monthly increase in October was 0,3%, edging up from 0,2% recorded in both September and August.
The major contributors were categories such as food and non alcoholic beverages which increased by 1.3% on basis and annual surge of 5.4% all in October, this is the largest annual upsurge since September 2017.
Let’s now examine how all categories have been pricing their products and services both in October and previous 12 months
Pensioners
Prices for pensioners increased by 0.3% monthly which brought upon 3.4% annual increase in October.
Food and non alcoholic beverages
Prices of Food saw a monthly surge of 1.4% and annual rise of 5.4%. The major contributors to this surge came from Oil & fats (2.8%) and (10.0%) annual, Fruit (2.8%) and (13.5%) annual and vegetables(3.5%).
Prices for Non alcohol beverages went up by 1.2% monthly and 3.4% annually. The change was induced by increases of (1.5%, monthly & 6.3% annually) in hot beverages with main driver behind this upsurge prices being black tea. Black tea prices jumped by 3,9% in October compared with September, resulting in an annual rise of 10,4%. and (1.2%, monthly & 1.9%, annually) in cold beverages
Alcoholic beverages and tobacco
Bare in mind the change reflected in these prices disregards activities occurring in the informal market thus, the overcharging of alcohol & tobacco on the informal trade market that customers quarrelled about aren’t accounted for.
The prices remained flat for the month of October but annual reading saw 2.7% rise. Wine and beer are the only items to have recorded monthly increases both at 0.1% and annual rise of 5.0% and 1.4%, respectively. The price of spirit fell by 0.5% monthly and rose by 3.2% annually. Tobacco did rise by 1.2% monthly and jumped by 7.5%.
Clothing and footwear
Clothing and footwear had slight increases of 0.1% both monthly and annually. Prices of clothes remained stagnant for a month of October but rose by 0.2% on an annual basis. Footwear rose by 0.2% monthly but fell by 0.1% annually.
Housing and utilities
Monthly figures saw no change in prices but increased of 2.9% annually. Monthly prices for rentals for housing, owners’ equivalent rent and water and other services remained constant but had annual increases of 1.4%(owners’ equivalent rent), 1.3%(rentals for housing) and 6.1%( water and other services). Surprisingly, Electricity and other fuels descended by 0.1% monthly before hitting 5.9% annual increase.
Households contents and services
Monthly and annual prices rose by 0.1% and 1.7%, respectively. Both appliances, tableware and equipment and supplies and services had slight increases and only furnishings, floor covering & textiles recorded decreases(-0.1% monthly and 2.0% annually)
Health
The costs for healthcare services rose by 0.2% monthly and 4.1% annually driven by sharp rises of 0.4% monthly and 2.9% annual medical products. Medical services remained unchanged in October before chalking down annual increase of 5.0%
Transport
Transport services shed 0.2% both monthly and annually. The costs of acquiring vehicle ticked up by 1.0% in October and 4.6% on annual basis. Private transport operation gravitated by 0.2% and 6.5% annually with the main factor behind this turbulence being fuel prices with a decrease of 2.5% and a staggering decrease of 9.1% annually as a result of the local unit remaining valued under $/R15.50 and the brent crude price hovering around $40 per barrel. To nobody’s surprise, the public transport increased by 0.6% monthly and 2.9% annually following an echoing outcry by the taxi operation industry citing the government disregarding the severity of the impact of #Covid19SA in the industry thus, leaving them operating at a deficit with no adequate financial compensation tabled.
Communication
The prices remained steady for the month but shed 0.3% annually and the postal services and telecommunications services dwelled on the segmental average the same figures while telecommunication equipment fell by 0.4% monthly and 1.3% annually.
Recreation and Culture
Prices went up to 0.4% on monthly review and 1.8% annually buoyed by prices of both recreational equipments and books, newspapers and stationery. Recreational equipment ascended by 0.5% monthly and 0.8% annually while books, newspapers and stationery rose by 1.7% monthly to bring a massive annual jump of 9.4%. Packages holidays remained unshaken while recreational and cultural services remained steady monthly and 1.9% rise annually.
Education
The costs of education remained constant on a monthly scale but 5.6% surge was recorded annually. This doesn’t come as a surprise since the costs of education are conventionally reviewed before the end year in preparation for the new and upcoming academic year thus, a change once in year usually at the beginning of the year may be expected as different sectors are laboring to conjure up turn-around strategies to assuage the eye-watering impact of #Covid19SA.
Restaurants and hotels
Restaurants and hotels prices remained the constant, monthly but increased by 1.9% annually. Restaurant prices remained steady on a monthly review to bring a 2.0% annual increase while for those whose work demands lot of local travels, on average they had to fork out extra 0.5% on hotel prices for only the month of October which is 0.7% less during the same month last year. The restaurant industry has been on the news recently being accused for overlooking the SA citizens when it comes to recruiting staff, the industry is said to be going for cheap foreign labor on the basis that they aren’t affiliated to any trade union leaving them without any choice but rather to accept any wage figure an entity offers. If this matter is taken with a significant amount of seriousness like that of truck industry, then we should glue our eyes on the restaurant prices as high labor costs emanating from employing more local individuals might filter into the customers’ costs.
Miscellaneous goods and services
Other goods and services not accounted in all of the above segments increased by 0.1% monthly taking it to the 6.8% annually. Personal care prices increased by 0.7% monthly and 0.3% annually. Insurance and Financial services remained unchanged during the month in question while costing 7.3% and 7.4% more than the same time last year, respectively.
One can easily understand that the segments in which we experienced significant amounts of changes were operational during lockdowns. Education, communication, restaurants and hotels and recreation and culture had slight changes if not at all or only annual change because they were perniciously affected by lockdowns and their operations were constrained and confined in stillness example, tourism and travels industry remained remained subdued as the country slowly eases its lockdown restrictions. A number of categories in the inflation basket recorded an annual fall in prices in October, most notably fuel (-9,1%), package holidays (-3,7%) and hotels (-3,3%).
Food and beverages, health, clothing and footwear recorded price increases because they were open for businesses during lockdowns under the category classification of essential goods and services and other categories are accommodated through a gradual easing of lockdowns restrictions hence, some had slight changes to their price levels.
By Erasmus Boshomane
Email: eboshomane7@gmail.com
Cell: 084 847 6895
Earlier last week STATSSA announced that the Headline CPI went up to 3.7% hitting the highest record since 4.1% penned in March this year. The monthly increase in October was 0,3%, edging up from 0,2% recorded in both September and August.
The major contributors were categories such as food and non alcoholic beverages which increased by 1.3% on basis and annual surge of 5.4% all in October, this is the largest annual upsurge since September 2017.
Let’s now examine how all categories have been pricing their products and services both in October and previous 12 months
Pensioners
Prices for pensioners increased by 0.3% monthly which brought upon 3.4% annual increase in October.
Food and non alcoholic beverages
Prices of Food saw a monthly surge of 1.4% and annual rise of 5.4%. The major contributors to this surge came from Oil & fats (2.8%) and (10.0%) annual, Fruit (2.8%) and (13.5%) annual and vegetables(3.5%).
Prices for Non alcohol beverages went up by 1.2% monthly and 3.4% annually. The change was induced by increases of (1.5%, monthly & 6.3% annually) in hot beverages with main driver behind this upsurge prices being black tea. Black tea prices jumped by 3,9% in October compared with September, resulting in an annual rise of 10,4%. and (1.2%, monthly & 1.9%, annually) in cold beverages
Alcoholic beverages and tobacco
Bare in mind the change reflected in these prices disregards activities occurring in the informal market thus, the overcharging of alcohol & tobacco on the informal trade market that customers quarrelled about aren’t accounted for.
The prices remained flat for the month of October but annual reading saw 2.7% rise. Wine and beer are the only items to have recorded monthly increases both at 0.1% and annual rise of 5.0% and 1.4%, respectively. The price of spirit fell by 0.5% monthly and rose by 3.2% annually. Tobacco did rise by 1.2% monthly and jumped by 7.5%.
Clothing and footwear
Clothing and footwear had slight increases of 0.1% both monthly and annually. Prices of clothes remained stagnant for a month of October but rose by 0.2% on an annual basis. Footwear rose by 0.2% monthly but fell by 0.1% annually.
Housing and utilities
Monthly figures saw no change in prices but increased of 2.9% annually. Monthly prices for rentals for housing, owners’ equivalent rent and water and other services remained constant but had annual increases of 1.4%(owners’ equivalent rent), 1.3%(rentals for housing) and 6.1%( water and other services). Surprisingly, Electricity and other fuels descended by 0.1% monthly before hitting 5.9% annual increase.
Households contents and services
Monthly and annual prices rose by 0.1% and 1.7%, respectively. Both appliances, tableware and equipment and supplies and services had slight increases and only furnishings, floor covering & textiles recorded decreases(-0.1% monthly and 2.0% annually)
Health
The costs for healthcare services rose by 0.2% monthly and 4.1% annually driven by sharp rises of 0.4% monthly and 2.9% annual medical products. Medical services remained unchanged in October before chalking down annual increase of 5.0%
Transport
Transport services shed 0.2% both monthly and annually. The costs of acquiring vehicle ticked up by 1.0% in October and 4.6% on annual basis. Private transport operation gravitated by 0.2% and 6.5% annually with the main factor behind this turbulence being fuel prices with a decrease of 2.5% and a staggering decrease of 9.1% annually as a result of the local unit remaining valued under $/R15.50 and the brent crude price hovering around $40 per barrel. To nobody’s surprise, the public transport increased by 0.6% monthly and 2.9% annually following an echoing outcry by the taxi operation industry citing the government disregarding the severity of the impact of #Covid19SA in the industry thus, leaving them operating at a deficit with no adequate financial compensation tabled.
Communication
The prices remained steady for the month but shed 0.3% annually and the postal services and telecommunications services dwelled on the segmental average the same figures while telecommunication equipment fell by 0.4% monthly and 1.3% annually.
Recreation and Culture
Prices went up to 0.4% on monthly review and 1.8% annually buoyed by prices of both recreational equipments and books, newspapers and stationery. Recreational equipment ascended by 0.5% monthly and 0.8% annually while books, newspapers and stationery rose by 1.7% monthly to bring a massive annual jump of 9.4%. Packages holidays remained unshaken while recreational and cultural services remained steady monthly and 1.9% rise annually.
Education
The costs of education remained constant on a monthly scale but 5.6% surge was recorded annually. This doesn’t come as a surprise since the costs of education are conventionally reviewed before the end year in preparation for the new and upcoming academic year thus, a change once in year usually at the beginning of the year may be expected as different sectors are laboring to conjure up turn-around strategies to assuage the eye-watering impact of #Covid19SA.
Restaurants and hotels
Restaurants and hotels prices remained the constant, monthly but increased by 1.9% annually. Restaurant prices remained steady on a monthly review to bring a 2.0% annual increase while for those whose work demands lot of local travels, on average they had to fork out extra 0.5% on hotel prices for only the month of October which is 0.7% less during the same month last year. The restaurant industry has been on the news recently being accused for overlooking the SA citizens when it comes to recruiting staff, the industry is said to be going for cheap foreign labor on the basis that they aren’t affiliated to any trade union leaving them without any choice but rather to accept any wage figure an entity offers. If this matter is taken with a significant amount of seriousness like that of truck industry, then we should glue our eyes on the restaurant prices as high labor costs emanating from employing more local individuals might filter into the customers’ costs.
Miscellaneous goods and services
Other goods and services not accounted in all of the above segments increased by 0.1% monthly taking it to the 6.8% annually. Personal care prices increased by 0.7% monthly and 0.3% annually. Insurance and Financial services remained unchanged during the month in question while costing 7.3% and 7.4% more than the same time last year, respectively.
One can easily understand that the segments in which we experienced significant amounts of changes were operational during lockdowns. Education, communication, restaurants and hotels and recreation and culture had slight changes if not at all or only annual change because they were perniciously affected by lockdowns and their operations were constrained and confined in stillness example, tourism and travels industry remained remained subdued as the country slowly eases its lockdown restrictions. A number of categories in the inflation basket recorded an annual fall in prices in October, most notably fuel (-9,1%), package holidays (-3,7%) and hotels (-3,3%).
Food and beverages, health, clothing and footwear recorded price increases because they were open for businesses during lockdowns under the category classification of essential goods and services and other categories are accommodated through a gradual easing of lockdowns restrictions hence, some had slight changes to their price levels.
By Erasmus Boshomane
Email: eboshomane7@gmail.com
Cell: 084 847 6895
Wednesday, October 28, 2020
The tourism industry welcomes the opening of borders
Earlier last week the STATSSA monthly statistical release showed how much the #covid19SA lockdown restrictions annihilated the tourism industry. The country had a total of 205 132 travellers of which 66 892 were South African residents and 138 240 were foreign travellers through South African ports of entry/exit in August 2020. A further breakdown of the figures for South African residents indicates that there were 30 547 arrivals, 36 345 departures and no travellers in transit. The corresponding volume for foreign arrivals, departures and travellers in transit was 67 051, 71 148 and 41, respectively.
The number of South African residents saw a reduction of 93,7% . Departures decreased by 93,0% from 522 927 to 36 345, and transits decreased by 100,0% descending from 976 to nothing.Coming from outside the country’s national borders foreign travellers, arrivals decreased by 95,1% from 1 377 914 to 67 051, departures decreased by 94,1% from 1 215 970 to 71 148 while transits decreased by almost 100,0%, all figures were recorded during the period reading from 482 712 in August 2019 to 30 547 in August 2020.
Due to stringent #covid19SA regulations, road transport was the most easy to use mode of transport as it shaded the chunk of all categories starting with just mode of transport trickling to sub-categories such as mode of transport by regions, gender, age etc. The road transport was used by 180 023 which is 87,8% of the total 205 132 travellers. Only 24 461 (11,9%) made use air transport while just a granule amounting to 648 (0,3%) used sea transport. Further information can be sourced from the STATSA website.
During an additional stimulus announcement, President Cyril Ramaphosa conceded that due to the restrictions the tourism industry lost significant amount of money. “I cannot quantify exactly how much,” said the President. “We can potentially regain some of this loss if we address the architecture of our current system. Arrangements are being finalised for a whole string of countries; the announcement will be made soon. In fact, in just weeks we expect the announcement. This will open doors to various countries.”
Government to amend lockdown restrictions and what lies ahead?
Ramaphosa further highlighted the concerns and complaints they received from travellers who would like to come to SA that they dragging back the industry. The pernicious effect of #Coivid19SA on the tourism industry cornered the government into making what could be a premature decision of assuaging the situation by making amendments on the lockdown restrictions while talks of “Second Wave’’ of infections being on the horizon gains momentum. The send wave of #Covid19 infections has already been seen in countries like China, France, UK while US now have the third wave gawking at their thwacked economy. Amendments would be made to the regulations on the travel of minors; the list of countries requiring visas for South Africa would be reviewed and an e-visa pilot would be implemented. The visa requirements for highly skilled foreigners would be revised.
The decision to amend lockdown regulations has obviously conceived trade-off which will emerge in case of Government having to delist the countries which make up a chunk of if not the biggest contributors to the total travellers through SA port of entry/exit. Another trade-off will be that of granting allowance to countries that still remain epicentre if not amongst the top countries on the infections chart.
Now let’s look at who are the most popular overseas visitors in SA
10 countries make up 75.5% of all tourists from overseas countries(20
full list of high-risk countries, from which tourists may not visit South Africa, as of 19 October:
United States of America (USA): 35 699 (21.5%)
United Kingdom (UK): 21 834 (13.1%)
India: 13 238 (8.0%)
Germany: 11 827 (7.1%)
France: 11 142 (6.7%)
Australia: 8 825 (5.3%)
China: 7 259 (4.4%)
The Netherlands: 5 782 (3.5%)
Brazil: 5 149 (3.1%)
Canada: 4 771 (2.9%)
In May 2019, the figures show that the number of tourists decreased for four of ten leading countries, France, Germany, The Netherlands and Brazil. Of the top ten countries, only Australia is not listed as banned from travelling to SA thanks to their efficient and effective measures, Furthermore, all the BRICS members are banned despite the President Ramaphosa pointing his BRICS Co-member’s plea ‘I have heard on my own travels that there are people who want to come to South Africa but find it difficult. Chinese President, Xi Jinping, said to me that there are a growing number of Chinese middle-class tourists who want to travel here but find the regime prohibitive.” Ramaphosa said.
With their agape hands, the Tourism Business Council of South Africa (TBCSA) welcomed on of the by-product in the announcement that the list of countries requiring visas for South Africa would be reviewed and an e-visa pilot would be implemented. The visa requirements for highly skilled foreigners would be revised. “We are hoping that the announcements in the following weeks will address all the concerns we have raised with regard to visas and unabridged birth certificates. We have said from the start that unabridged birth certificates have created a large problem for tourism. We want this gone to re-encourage the movement of people into SA.” Interim CEO of the Tourism Business Council of South Africa (TBCSA), Tshifhiwa Tshivhengwa,
Effect
Although the second wave might be on the cards, the effect of this decision of easing regulations to perk up some industries such as tourism will most likely be felt as some parts of the industry, saw operation narrowed while others experienced no activity at all. In addition to that, some of the regular visitors own properties in the country, "Most of them own properties in the country. We appreciate the significant economic contribution that they make through their activities in the country. To this end, we will also allow visitors, in whichever category, who are coming to stay for a three months period or more subject to Covid-19 protocols." The Department of Health Affairs said. Another significant degree of impact will be expected from the revision of Visa regulations after the removal of visa regulation requirements saw the Russia-RSA market expanding by a staggering 47% in the 2nd quarter of 2018.
By: Mmamoloko Boshomane
Email: eboshomane7@gmail.com
Cell: 084 847 6895
Thursday, August 6, 2020
Despite leverage Mechanisms, blended finance remains inviable approach for LDCs
Sunday, July 5, 2020
Another Oil Price War on the cards
Wednesday, June 24, 2020
Copy of Supplementary Budget Speech by Tito Titus Mboweni, MP Minister of Finance
Mr President
Mr Deputy President
Cabinet Colleagues
Governor of the South African Reserve Bank
Members of the Executive Committees for Finance
Honourable Members
Fellow South Africans
Molweni
- The Division of Revenue Amendment Bill
- Adjustments Appropriation Bill
- Supplementary Budget Review
- Disaster Management Tax Relief Bill
- Disaster Management Tax Relief Administration Bill
Posts
IDC launches R1.5 billion funding package towards the recent unrest and looting.
The Industrial Development Corporation (IDC) has launched a R1.5 billion funding package in response to the civil unrest, looting and dest...
-
Exchange Traded Funds VS Exchange Traded Notes The difference between the two instruments that confuses many as they both track the performa...
-
After SA finance minister Tito Mboweni affirmed his stance regarding whether the country should knock at IMF door in order for the country ...
-
11:05 Thursday, 23. January 2020 By Mmamoloko E. Boshomane eboshomane7@gmail.com South Africa Economic growth contracted by 0.6% in ...
