Authorised Financial Services Provider – FSP No: 859.

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Presentation transcript:

Authorised Financial Services Provider – FSP No: 859

International & Local Economies - Whereto are we Sailing? Presented by: Dawie Roodt 6 November 2008

Where Did it All Begin?

Nasdaq Bubble U.S. Interest Rate Source: I-Net, Efficient Research, 2008 Subprime Market Emerges….

Subprime Housing Market ‘Subprime’ = –A loan that is offered at a rate above prime (0.1% - 0.6% higher) to individuals who do not qualify for prime rate loans. …… “NINJA” loans

It’s All In The Packaging Subprime Loan RISK CAPITAL Sell Re-sell Sell

Subprime Bubble Bursts Credit Crises Nasdaq Bubble U.S. Interest Rate Inflation Source: I-Net, Efficient Research, 2008

Consequences….. U.S. Institutions –Bear Sterns, Lehman Brothers, Merrill Lynch bankrupt or taken over –AIG, Fannie Mae, Freddie Mac bailed out U.K. & Europe –Northern Rock Iceland = Bankrupt! Credit Market Freeze……

Emergency Rescue Plans U.S. –$700bn bailout package –Additional Interest rate cuts (100bp) –Fed buys commercial paper –Fed doubles its auctions to banks ($900bn) –Etc. U.K. & Europe –U.K. £50bn purchase of preference shares –BOE & ECB Interest rate cut (50bp) & more to follow.. –Guarantees private & retail deposits G7 Meeting IMF Germany €400bn China Cuts i% $$$

Will It Work…..? Financial Markets Real Economy

What About Us?

Excellence in SA Banking Sector SA Banks Locally: No Direct Exposure International: Limited Exposure Thorough Assessment by Registrar of Banks in July 08 : “financial system is sound” International Comparison on Safety of Banks : SA is 15 th out of 134

Where Will It Impact?

Dollar Strength Source: I-Net, 2008

Commodity Prices Source: I-Net, 2008

Rand Weakness Source: I-Net, 2008

Interest Rate Advantage Source: Efficient Research, 2008

Slowing International Demand Source: SARS, 2008 Other 8.0% Recession?? Slower Growth??

What Do We Export? Source: SARS, 2008 Mining Manufacturing

Balance of Payments Source: SARS and own calculations

Source: SARB, 2008 C/A Deficit Funding “Hot Money” -DANGER-

Still Positive on SA Growth Source: StatsSA and own calculations Average: 3.0%

To The Future Stricter Regulation & Control More Protectionism, Political Tension Slowdown in Western Demand, Increase in Eastern Consumption Looming Inflation Pressures.. Monetary Policy Changes – Monetary Aggregates - Higher Interest Rates Weaker Western Currencies Stronger European Integration

A Changing World West becomes more Socialist East becomes less Socialist

Authourised Financial Services Provider – FSP No: 859

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