The new Financial Sector Forum Website

Visit the new Financial Sector Forum Website

The new Financial Sector Forum at http://www.financialsectorforum.com will, in time, consolidate two existing websites: The existing Financial Sector Forum at http://www.finforum.co.za and South Africa: Financial Institutional Structure at http://reservebanksa.blogspot.com (here).
This action was necessitated by a lack of funding,

Posts on the new Financial Sector Forum website include:

• Malfunction of banks can sink global economy
• The National Payment System Framework and Strategy
• Absa: Household mortgage debt
• SA Reserve Bank Quarterly Bulletin
• Nedbank Weekly Economic Monitor
• Absa: SA Morning Sheet – daily economic comment
• Online fraudsters target Rugby World Cup
• Tainted credit records depress house market
• Nedbank: Mining production
• Nedbank: Manufacturing production
• Absa: House price indices
• Nedbank: SA Reserves
• Nedbank Weekly Economic Monitor
• Time to get credit rules roadworthy
• E&Y Financial services index
• Composite business cycle indicators for South Africa
• Absa: Mortgage advances
• Nedbank: Trade data

This site will also link to sister website, The Financial Regulation Forum at http://www.financialregulationforum.com

  PLEASE HELP US TO IMPROVE OUR INFORMATION CONTENT AND CONTINUE THE SERVICE If you found the information on this website useful and if you or your company would like to see it expand please click on DONATE. Thanks on behalf of the Financial Regulation Forum and the Financial Sector Forum - the Editor.

ANC youth leaders want business nationalised

Flushed with its success in persuading the African National Congress (ANC) to probe nationalising mines, the ANC Youth League is now proposing expropriation of strategic sectors of the economy without compensation.

The demand is contained in the league’s discussion documents for its national conference, released at a press conference in Johannesburg yesterday. The league’s elective conference is due in June.

Last year the league prevailed at the ANC’s national general council when the mother body adopted its proposal that nationalising mines be investigated — despite President Jacob Zuma ’s insistence that the matter would not be discussed at the meeting.

Understanding the new Consumer Act

Consumers are beginning to reap the fruits of the new Consumer Protection Act, especially those who could not cancel fixed or life-long contracts.

In the past Frederick Nong would have been bound to the contract he signed with The Holiday Club if he failed to cancel within the cooling off period.

He was allowed to revoke it but would forfeit the initial fee he paid to kick-start his timeshare contract.

Nong, an existing client, said he signed a second contract on the understanding that he was upgrading the existing one.

Currency volatility: why it's a problem

High currency volatility makes it difficult for businesses to plan and budget, according to Michael Keenan, head of forex research at Standard Bank.

"Importers and exporters have to do cost planning for their businesses and a huge part of that cost is not only the product or the service they are offering, but also the exchange rate," he said.

"So if they do not get the exchange rate right when they hedge, or they do not hedge, their competitors could beat them with a more competitive offering based purely on the exchange rate."

Keenan said that SA was one of the few emerging market countries that has not taken steps to curb portfolio inflows - unlike Brazil and certain Asian countries have done - and this had made the rand particularly vulnerable to appreciation and volatility.

Survey shows 38 percent want nationalisation

Some 38 percent of South Africans believe that mines should be nationalised, according to a survey of 2000 people released on Monday.

"The level of agreement differed considerably by race, showing that this could be a very divisive issue," said TNS Research Surveys in a statement.

"In a survey of 2000 residents of South Africa's metropolitan areas conducted in February 2011... [it was] revealed that 38 percent of metro adults feel that South Africa's mines should be nationalised.

"TNS said that 28 percent disagreed and a considerable 34 percent gave a 'don't know' response -– a much higher 'don't know' response than usual, suggesting that the pros and cons of the issue have yet to be fully explicated to people."

The research found that black South Africans were more in favour of the idea than whites.
"Amongst those venturing an opinion, blacks are in favour by more than two to one, whilst whites are not in favour by almost three to one, with an absolute majority being negative (56 percent).

"For the other two race groups, opinions are equally divided. This is clearly a difficult and potentially emotive issue."

Afrikaans-speaking people were the most negative about the idea while Tswana speakers were the most positive.

Source: Time Live

SAFEX shut down on JSE

Technical issues have brought a halt to trade on the South Africa’s Futures and Exchange market (SAFEX) board of the Johannesburg Stock Exchange (JSE) on Monday.

The equity derivatives market on the JSE usually opens up for trade at 08h30am, but this did not occur on Monday morning as a result of "technical issues".

Michelle Joubert, the head of investor relations on the JSE, told Business Day that the exchange’s IT division is hard at work fixing the problem.

"It is down to a technical glitch and not due to problems in the trading engine itself. We have isolated the cause and we are working to rectify it," she said.

Source: Business Day

Growth in house prices remained low in March

Price growth in the value of middle-segment homes in the South African housing market remained at a relatively low level on a year-on-year basis up to March, the latest Absa house price index shows.

Marginal monthly price growth was evident in two of the three categories of housing measured by the Absa house price indices. Real year-on-year (y/y) price declines occurred in the segments of medium-sized and large houses in the first two months of the year, while real price growth in respect of small houses edged down further in February this year.

In the category of small houses, nominal y/y price growth of 2% was registered in March, compared with 4.1% in the preceding month, thus the average price of a small house was recorded at about R794,200 in March. In real terms, price growth in this segment of the housing market came to 0.4% y/y in February.

Monetary Policy Committee decision

The Reserve Bank kept the repo rate unchanged at 5,5% yesterday, even as governor Gill Marcus warned of significant risks to the inflation outlook for the year.

With analysts and the Bank expecting inflation to reach the top of its 3%-6% target band this year, the next move in interest rates could be upwards for the first time since June 2008.

Analysts said the Bank’s action in keeping rates steady was in line with expectations.

"The monetary policy committee (MPC) is of the view that the risks to the inflation outlook are on the upside," Ms Marcus said when announcing the committee’s decision at a news briefing in Pretoria yesterday.

Bank fees reform

Banks have been getting away with charging high fees. It has benefited shareholders to the detriment of consumers. But new reforms are coming soon that will force banks to change their market conduct

In May last year, finance minister Pravin Gordhan summoned the CEOs of the Big Four banks — Standard Bank, Absa, First National Bank and Nedbank — to his office. The bank bosses knew what they were in for. Their market conduct in retail was in question: bank charges were high and there was a lack of transparency around them . Gordhan wanted to rein in these charges.

In 2004 treasury and the Reserve Bank commissioned work into the competitiveness of banks in SA. That led to a banking inquiry by the competition commission in 2006, headed by advocate Thabani Jali, and the banks were forced to divulge the extent of their market dominance and practices.

Index shows factories more confident, and hiring again

The manufacturing sector may be hiring again, according to the Kagiso purchasing managers index (PMI) for last month.

The PMI — which reflects the percentage of purchasing managers in an economic sector who reported better business conditions compared with the previous month — stabilised last month, increasing from 54,6 points in January to 54,8 points.

A number above 50 implies that overall sentiment is positive, while a figure below 50 suggests managers have a generally negative outlook.