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Ok. Got itHeadline inflation for the year to January 2024 increased to 5,3% from 5,1% the previous month, in line with market expectations.
The South African equity market continued its negative trend in February with the mobile operator MTN under pressure (-12.6%) due to challenges in the Nigeria market. Post-month-end MTN guided to a decline in full year HEPS of between 60-80%. Sasol’s share price declined 11.9% in February. Notable positive movers for the month were Multichoice (+39.2%) following an offer to acquire it by Canal+, Richemont (+8.9%) and British American Tobacco (+3.0%).
The State of the Nation Address (SONA) contained few revelations but confirmed that the current Social Relief of Distress (SRD) grant would be extended and enhanced from its current form. The address also made reference to incremental NHI implementation, while infrastructure investment and reforms (increased private sector involvement) remained centre stage. The 2024 Budget delivered by Finance Minister Godongwana did not contain any evidence of election-type spending or policy deviations, and the market reaction reflected this.
On the electricity front, RMB Morgan Stanley note that the average stage of loadshedding was 1.8 for the first two months of this year, versus 3.8 for the same period in 2023. Additionally installed rooftop solar capacity has more than doubled to 5.4GW from the 2.4GW a year ago.
Headline inflation for the year to January 2024 increased to 5,3% from 5,1% the previous month, in line with market expectations. Food prices were up 7% y/y versus the peak of 14% in March 2023. Private Sector Credit Extension decelerated to a two-year low, a reflection of the tough economic conditions.
Expectations are for a moderation of food price increases. This, together with anticipated rate cuts (moderate) will be supportive of improved consumer demand in the latter half of the year.
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