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EU President urges U.S, Russia and China to prevent a trade war

The EU President warned the U.S., Russia and China to work together with Europe to avoid a trade war. EU President Donald Tusk said this at the opening of a summit between China and European Union in Beijing.

“We are all aware of the fact that the architecture of the world is changing before our very eyes and it is our common responsibility to make it a change for the better”, said the EU President. Tusk urged the Presidents of the three countries to improve the current world order by reforming international trade rules. He believes that “there is still time to prevent conflict and chaos”. He used the platform to appeal to the summit host nation China but also called out to President Trump and Russian President, Putin to jointly start the process of a thorough reform of the World Trade Organisation. 

This comes after Tusk criticized the Donald Trump’s constant criticism of the European allies and advised him to remember who his allies have always been.  The American government increased tariffs on imported goods have affected many countries including, China, Canada, Mexico and the European Union.

Additional Reporting on: The Independent

Belgium pledges €30m to SA for land expropriation process

The Belgium government has pledged €30m to the South African government for the land reform process. This was confirmed at the meeting between the South Africa’s Minister of International Relations and Cooperation, Lindiwe Sisulu and the Belgium Deputy Prime Minister and Foreign Minister, Didier Reynders, yesterday.

“We are sure that we need to go firm on the process of land reform because it was at the beginning [of] the reconciliation process of the country”, said Minister Reynders at a press conference after the meeting.

The Belgium Minister pledged his country’s support to South Africa’s amendment of Section 25 of the Constitution which allows for expropriation of land without compensation. The minister however, emphasised the need for balance in the process. The Deputy Prime Minister also explained that his country supports this motion because: “It’s a difficult issue in many countries”

In support of this the South African Minister, Lindiwe Sisulu, indicated that there is a misunderstanding around the South African land reform issue across the world referring to the American President’s tweet on South Africa’s land reform. Minister Sisulu, further highlighted that “[her department] are doing something about it to educate the world about what we are doing to redistribute the land,”

Minister Sisulu went further to show appreciation to the Belgian government stating that “the bottom line which has come through is the Belgian government has understood our position, has from the beginning been with us, [and] committed €30 m to the process.”

By Ntsikelelo Kuse

Recession sent the South African currency and bond tumbling

South Africa was reported to have a hit a recession for the first time in 9 years on Tuesday. This news brought focus to the South African dwindling revenue that could deepen bond sell-off. Since August investors have discarded South African bonds with fear over the Turkish double-digit inflation which is now nearly 18%, this influenced bond sell-off in various emerging economies.

Related story:South Africa has fallen into its first recession in almost a decade

Economist were positive when the bonds inflow started picking up in July after a record high sell-off in June, the Johannesburg Stock Exchange data recorded R1.6 billion in bond inflow in July after almost R60 Billion of outflows in the second quarter.  However, news of the recent recession sent the South African currency and bond tumbling, the South African rand fell the hardest against the dollar compared to other emerging economies.

The news of the bond tumbling come after the South African National Treasury and the JSE launched a new Electronic Trading Platform for Government Bonds on the 29th of August 2018. The Electronic Trading Platform is expected to position South Africa’s Capital Markets amongst the sophisticated global Capital Markets.

The JSE’s Debt Board currently lists over R2 trillion government bonds, investors loan money to the government entities by buying the listed bonds, by doing this the investors earn regular interest payments and receive the money loaned after a period.

The recession is a blow to the new President of South Africa who has been on a quest to revive the South African economy after a decade of stagnation under the former President.

By Ntsikelelo Kuse

China faces increased economic risks in second half of 2018

China’s economy is currently facing increasing risks in the second half of the year and policymakers need to step up efforts to hit key development goals as U.S. trade tensions intensify.

The Chairman of the National Development and Reform Commission, He Lifeng told the standing committee of the National People’s Congressthat:“targets in economic growth, employment, inflation and exports and imports can be achieved through effort. But to achieve growth goals in consumption, outstanding total social financing and urban disposable income will require bigger effort.”

Reuters informed that China’s economy is already starting to cool even before the trade fallout bites, with investment growth at a record low and consumers becoming more cautious about spending.

Lifeng included that China will continue its multi-year campaign to reduce financial risks and curb debt, but will control the pace and intensity of such efforts, echoing a central bank pledge that the country won’t resort to strong stimulus this time to prop up growth.

Source: Reuters

 

Colombia withdraws from UNASUR

The new President of Colombia, President Ivan Duque announced on Monday 27 August that Colombia has started a formal process to withdraw from the Union of South American Nations (UNASUR). To start the process, a member country needs to send a written notice to the bloc’s headquarters. The Colombian government did this by sending a letter to the Union Headquarters announcing its withdraw. 

The President, Ivan Duque, said on Monday: “Today with precise instructions, the foreign minister sent UNASUR the letter where we denounce the constituent treaty of that entity and in six months our withdrawal will be effective.” 

Throughout his election campaign, President Duque vowed that once he is in power he will ensure that Colombia leaves the bloc. The bloc started in 2008 as an attempt to counter the US influence in the region and create a harmonious cooperation between the 12-member states. The South American Presidents decided to form their own bloc to oppose the proposal backed by the US for a Free Trade Area in North and South America, also highlighting that the bloc will help the South American countries move towards economic and political union.

President Duque says the reason his country left the bloc was due to the failure of the bloc to deal with the political crisis in Venezuela, he labels the UNASUR as the Maduro’s (President of Venezuela) administration’s ‘greatest accomplice’. In April 2018, 6 of the 12-member countries (; Argentina, Brazil, Chile, Colombia, Peru and Paraguay) suspended their membership of the bloc for a year, due to the differences in choosing the new secretary general of the bloc, making Colombia the first to finally terminate their membership.

Venezuela, Bolivia, Ecuador, Uruguay, Guyana and Suriname are the only states that remain in the bloc.

Additional Reporting: NewsGrid

 

 

Russia says BRICS countries are chasing weakening US dollar status

During an interview with a local television station, Russian Deputy Foreign Minister Sergei Ryabkov stated that BRICS member countries are determined to put an end to US dominance over global finance.

The Deputy Minister referred Washington’s abuses of the US dollar’s privileged position as reserve currency, saying: “We need to find ways to mobilise the international community and make it more resistant to this trend.”

According to Ryabkov, the current situation is the result of “negligence on the part of the rest of the international community,” which did not provide for the possibility that US political elites would begin to abuse this position to the detriment of other countries.

He said that many nations, including Russia, have already felt the effects of this abuse and emphasized the conclusion that “it is necessary to diversify the world’s reserve currencies, expand trade in other currencies, and adopt schemes to dodge American banks.”

Ryabkov also noted that it is impossible to ignore the status of the US as a superpower, also in the field of finance, so common efforts are needed to change the situation.

Source: MNA/Sputnik

 

Putin confident Russia can make scientific and technological breakthrough

Speaking at the 6th International Forum of Technological Development Technoprom in Novosibirsk, Russian President Vladimir Putin said that his country can make a technological breakthrough in its development.

“The viability of entire nations, societies and states, the countries’ positions in the world, especially such major states like Russia, depend on the cutting-edge technologies and their efficient development and most importantly, their quick implementation,” Putin said.

He stressed that scientific and technological breakthrough has become one of Russia’s key national priorities.”I’m confident that we can make it by uniting efforts of the state, businesses, scientific and educational society, and widening freedom for initiative and creativity of our people,” Putin added.

Source: tass.com

China cabinet announces plan to restrict risks in online finance

The Chinese State Council has confirmed that the country will continue to resolve financial risks in online lending and the use of shares as collateral for financing activities to protect market stability.

China’s cabinet stated that the government will speed up the development of a long-term regulatory mechanism for internet finance.

The cabinet spoke in a meeting of the state cabinet’s Financial Stability and Development Commission (FSDC) chaired by vice Premier Liu He.

The meeting comes a few days after a central government work group tasked with cracking down on online finance risks and proposed 10 new measures to curb risks caused by the troubled peer-to-peer (P2P) lending sector, to protect social and financial stability.

The state council committee also said in a statement that China will further deepen reforms of its capital markets to better serve the real economy. This includes taking the necessary measures to improve the quality of listed companies, reform stock issuance system, and broadening the long-term and stable funding sources for the country’s capital markets.

Source: Reuters

Kganyago open to second term as SARB head

South African Reserve Bank Governor Lesetja Kganyago said that if asked to, he would serve another five years at the helm of the central bank when his term comes to an end in November 2019.

Kganyago was appointed by former President Jacob Zuma almost four years ago and another term will extend his stay as head of the Reserve Bank until 2024.

The governor and his three deputies are appointed by the leader of the country for a fixed five-year term and legislation makes no provision for their removal.

“If the appointing authority tells me that somebody else could do the job, it is in the hands of the appointing authority,” Kganyago said.

“That is why you are appointed for a fixed term, so that during that term, you know that no one will interfere with you.”

Credit-rating companies have continuously cited the Reserve Bank and its leadership as institutional strengths for South Africa, even as they cut the nation’s debt to junk last year.

Kganyago said there was never pressure on him to step aside, even with changes at the National Treasury, and Zuma appointing people seen to be loyal to him to top positions at the revenue service and the National Prosecuting Authority.

“I can tell you that no one tried,” he said. “But if they were to try, they would have a fight on their hands.”

Source: Bloomberg

Russia stockpiles gold as Washington prepares to pile on new sanctions

According to International Monetary Fund data compiled by Bloomberg, the Central Bank of Russia bought 26.1 tons of gold in July, bringing its holdings to 2,170 tons. This makes it the largest single monthly purchase since late 2017.

The Russian Central Bank website showed that the stockpile was valued at $77.4 billion at the end of last month. The current prices revealed that the reserves are worth around $83.6 billion.

Russia has continued reducing its holdings of US treasuries. The country has lowered its holdings of US debt from $96.1 billion in March to just $14.9 billion in May.

The increased gold purchases come as the US President Donald Trump administration gets ready to impose new sanctions on Moscow.

The central bank’s First Deputy Governor Dmitry Tulin said that Moscow sees gold as a “100-percent guarantee from legal and political risks.”

The central bank also explained the strategy as part of diversifying the country’s reserves away from the US dollar.

The World Gold Council included that Russia is not only the largest official buyer of gold but also the world’s third-biggest producer, with its central bank purchasing from domestic miners through commercial banks.

In the past decade, Russia has mined more than 2,000 tons of gold, with annual production expected to rise by 400 tons by 2030.

 

Source: Russia Today