Category Archives: Team Commentary

The Bank of Namibia has hiked rates by 25BP (0.25%) at their August MPC meeting. The key concerns noted by the Bank were the strong growth in PSCE to households, utilised to finance “unproductive spending on luxury goods”, most of which are imported, and the pressure that these imports are putting on the country’s reserve position.

We view this move as positive from the perspective of the Namibian macro-economy (albeit bad for the individual consumer), and have been calling for higher rates for some time – In our January outlook, we noted – “In light of expectations of a weakening external position for Namibia, we believe that 2014 may see BON taking the lead by making interest rate moves before South Africa. While this would be a first for the Bank, given our growth and inflation projections, as well as expectations of strong expansion in private sector credit extension, a weak balance of payments, plummeting reserves and high household indebtedness, we believe that economic conditions in Namibia are likely to be substantially different from those in South Africa, and that should a hike appear imminent in South Africa, that BON may act first by tightening rates” This view now appears to be playing out.

The full MPC statement can be seen below:

Download (PDF, Unknown)

At the August meeting of the MPC, the Bank of Namibia hiked rates by a further 25BP (following the 25 point hike in June). While not completely expected, this move is positive for the broad macro-conditions in Namibia.

More to follow…….

The Top40 and Alsi have been in what appears to be free-fall today, as BHP Billiton’s earnings miss forecasts, and the announcement that it is splitting off nickel, aluminum and other assets into a new company that could be valued at more than US$20 billion. However, we see this move as majorly over done, as earnings missed by a mere 0.7 percent, and current moves based on the company split are still speculative.

Nevertheless, Billiton is the single largest weighting in the Top40 index, at over 13 percent, meaning that a 1% move in Billiton represents 60-odd points on the Alsi. As such, the 5% sell off that we have seen today, represents a total of over 300 points on the Alsi, and captures in entirety the negative move we have seen on the index for the day so far.

Unlike today’s results, the comapny’s first half results were very positive, surprising to the upside by 8.9 percent. This divergence lead technical trader, Karin Richards ‏(@Richards_Karin), to rather fittingly, call Billiton “a tale of two halves”