South African Bonds Crash, Rand Hits Record Low After FinMin Fired

Without giving any reasons, South African President Jacob Zuma has fired his finance minister (after just 19 months in office). This has shocked investors, already anxious about the nation's surging debt and sluggish economy and South African bonds and FX have collapsed. 10Y yields spiked 140bps to 10.18% - the highest since July 2008 - and CDS have soared. The Rand has crashed to new record lows above 15 to the USD.

The Rand has collapsed to record lows...

Bonds have crashed to 7 year high yields

And South Africa is now the 10th riskiest sovereign in the world...

As Bloomberg reports,

The shock move came less than a week after credit-rating companies pushed the nation closer to junk status, citing concerns over a sluggish economy and rising debt. Nene’s departure, and uncertainty relating to his successor, raises questions about whether the National Treasury can stick to its spending targets.

“Especially at this point in time, we can ill afford to antagonize international investors,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said by phone from Johannesburg. “An event of this magnitude can even be the catalyst for a credit-rating downgrade to junk status. It could lead to a complete loss of investor confidence in South Africa, which could push us into a recession.”

“We are not so concerned about the person but rather whether Treasury controls the line on fiscal deficits and the debt stock, which we are watching,” Ravi Bhatia, director of sovereign ratings at Standard & Poor’s in London, said in an e-mailed response to questions. “South Africa is on negative outlook and our concerns highlighted in our last outlook statement remain.”

The economy is under strain because of plunging metal prices and power constraints. The central bank is forecasting growth of 1.4 percent this year, which would be the slowest pace since the 2009 recession.

Investors are concerned that “worsening macro performance will lead to a more politicized approach to fiscal policy and structural reform,” Arnab Das, head of EM Macro at Invesco in London, said by e-mail. “There is also a threat that further ratings downgrades may well lead to South Africa’s exclusion from global government bond indices in the next one to two years.”

Commerzabnk adds that President Jacob Zuma’s timing in removing Finance Minister Nhlanhla Nene “could not have been worse,” Peter Kinsella, head of EM FX research at Commerzbank, says in note.

Sacking has given rating agencies “perfect justification” for further downgrades and the loss of investment grade status

Investors should be cautious towards the rand, given that carry-trade strategies are “hardly working” and the commodity-price slump shows no signs of ending

“Put simply, this is no time to talk about valuation concepts for ZAR. Such strategies didn’t work before and are unlikely to now”

“If you are of the view that the majority of interest rate rectification by SARB has already taken place, then it makes little sense to liquidate bond positions at current levels”

The incoming Van Rooyen is the third finance minister since Zuma came to power in 2009. In that period, gross debt has surged from about 26 percent of gross domestic product to almost 50 percent. While Nene has sought to contain spending in a bid to rein in a widening budget deficit, his efforts have been frustrated by the government awarding above-inflation wage increases to workers over three years.

So that explains the carnage in capital markets.. the guy who wanted to instil at least some fiscal discipline... has been fired.

Charts: Bloomberg

Comments

[firstdivision]

Thar be gold there.

[Manthong]

SA Humor

http://i.imgur.com/QTqkte8.jpg

[Vampyroteuthis ...]

I don't believe the list above. Should not the US be in the top 10?

[spanish inquisition]

Just start selling future taxes on gold production and package them into tranches for sale. Problem fixed, duh!

[surf0766]

We never win at South African bonds. You see that graph. We are going to make South African bonds great again. All we have to do is shutdown part of the web, take some of your foolish property and let Russia handle ISIS. I mean bomb the hell out of ISIS. What week is this? I forgot are we doing the Russia thing or are we doing the take everyones oil thing?

How many times has Trump  told his subcontractos to his vets?

[Troy Ounce]

Pussy vs. fiscal discipline: 1 - 0

[Sizzurp]

Looks like the SA leaders have run out of other peoples money.  Now let's hope SA doesn't go the way of Rhodesia, but more than likely that's exactly what will happen.

[Salah]

what no one wants to admit or say: another black guy destroying a first world economy, which was 'give-to 'em

honestly, you'd think LibTards would read the original Merck lab-findings on Proscar

[curbjob]

That, and the China spigot drying up.

[strangeglove]

This is why Gold has been tanking sorry Janet!

[Magnum]

Time to stop procrastinating, but the ticket to Cape Town with my son and go on the 10 day guided motorcycle safari I've been dreaming about.  At 15 rand per dollar it's practically free.  Spend less than I would at home for 10 days...

[thethirdcoast]

Do it, I was just in that area at the end of September when the ZAR was around 14:1. Everything there is so cheap! The food is outstanding whether you shop at Woolworth's or eat out. People of all colors were quite friendly and willing to help a traveler out. You also have to go in the great white cage, do the helicopter tour, and take the day tour around the Cape Peninsula. Was also cool to see them excited about the Rugby World Cup, sad they lost to NZ, aka the Death Star of national rugby teams.

[Azannoth]

South Africa - the latest Colonial Paradise turned post-Colonial Shithole, are there any left to go or was that the last one?

[Sizzurp]

USA?

[RagnarRedux]

"The official king of South Africa’s Zulu tribe has announced that that country was economically, militarily, and socially better under white Afrikaner rule—and that history will judge blacks as only having destroyed everything that they had inherited from the white government."

http://newobserveronline.com/zulu-king-blacks-destroying-south-africa/

https://www.youtube.com/watch?v=j4f0INWfws0

http://news.bbc.co.uk/2/hi/africa/8547621.stm

https://www.washingtonpost.com/world/africa/zimbabwe-seized-white-farmer...

http://www.aljazeera.com/indepth/features/2015/10/zimbabwe-white-farmers...

http://a.disquscdn.com/uploads/mediaembed/images/2909/4579/original.jpg?...

[Sizzurp]

Democracy should never be allowed to vote on some things, like confiscating the private property, wealth, and income of others.  When you allow that kind of vote, it turns into the feeding frenzy that is mob rule.

[thethirdcoast]

Zulu King's comments in a South African paper:

http://www.iol.co.za/news/politics/king-praises-apartheid-regime-1.1956136#.VmmjPThIhH2

[youngman]

If you look at all the countries that used to be controlled by whites thru colonialism....this is true where they have reverted back to local rule...look at the Caribean...many countires there in total crap mode.....violence..poverty..corruption...broke...no jobs...

[Danno Anderson]

https://www.google.com/search?q=jacob+zuma+dancing&newwindow=1&tbm=isch&...

[Laddie]

Paradise Lost...
South Africa, like Rhodesia before it, was a FIRST WORLD NATION. The first heart transplant was done in South Africa by a Boer doctor, Christiaan Barnard in 1967.
But due to the Tribe both of those countries as well as South West Africa, had to go to BLACK RULE. The results are plain for all to see...

http://www.liveleak.com/view?i=43d_1446565525 Naked woman stoned and set afire in Mother Africa...the only thing that held them back from being the SUPERSTAR continent was the evil Whitey, with his medicine and agricultural techniques... 1 in 3 refugees to USA now from Africa

THE COMING DARKNESS: A Warning for Americans: A message from South Africa Written in 2000 by the wife of a former conservative member of parliament, they still reside in South Africa.

As we have noted, democracy was the plausible and, to the anaesthetised British people, morally unanswerable ideal whereby the destruction of British Africa was initially engineered. Yet the failure of this near-insane liberal experiment has in no way given pause to the systematic -- or rather, precipitate -- hand-over of power to the black inhabitants, no matter how incompetent, corrupt, blood-splattered and Marxist they might be. It is thus impossible to avoid the conclusion that this democratic idealism was never more than a cover for something entirely different but much more to the political point - namely the subjugation of the civilised white man.

It seems to be impossible to get people in Britain and America to realise that the capitulation of the West is due entirely to pressures exerted from within, not to pressures exerted from without. There is nothing 'inevitable' about it as we are taught to repeat. The 'march of events' is being paced out to the tune of Western 'fiddlers'.
WHITE MAN, THINK AGAIN! by Anthony Jacob, Johannesburg 1965

South Africa: 49 Murders a Day November 18, 2015

South African Dan Roodt, November 9, 2012

Many whites will emigrate or move to the remaining red states, just as South Africa’s whites have emigrated since 1994. But ultimately there will be no place to go, as the global demographic decline of whites means that even European countries suffer the same fate of dispossession.

Demography is destiny, as Auguste Comte said. There is a mysterious process whereby whites react to racial domination not by rioting or claiming special privileges as other races do, but by working harder, having even fewer children, and quarrelling among themselves. We see this happening in South Africa, in Western Europe and, of course, in America, where white Republicans and Democrats are like two dogs fighting over a bone, while a third is about to run away with it and leave them with nothing.

The Republican Party is poised to adopt the attitude of South Africa’s liberal opposition party, the Democratic Alliance, which has forsaken its core white support and practices affirmative action in its own ranks. There are three women on its election posters: one white, one colored or mixed-race, and one black, at once expressing the party’s diversity and its disdain for the white male.

Lest we forget, the rank and file of the Republican Party rebelled against Ronald Reagan’s veto and passed sanctions against South Africa on Sept. 29, 1986.

Since that time, the U.S. has consistently pursued an anti-white foreign policy. In Southern Africa it supported black Marxist movements such as the African National Congress (ANC) and the South West African Peoples Organization (SWAPO). In Europe, it has called for a large Muslim state—Turkey—to be included in the European Union. Would the American elite ever adopt a pro-white policy domestically while pursuing the opposite of such a policy externally?

There are three forces that are likely to determine the Republican Party’s position on white interests. The first is the wishes of its own electorate; the second is the corporate sector that funds the party, and the third is the mainstream media. America’s large corporations support affirmative action and diversity, while the media support multiculturalism. The GOP will follow their bidding and betray its voters.

Like the whites of the former Rhodesia, South West Africa, and South Africa, Republicans will embark on a forlorn search for conservative allies “of color” whom non-white voters will reject as traitors. Even if a black woman such as Condoleezza Rice could be fielded as the next Republican presidential candidate, it is doubtful whether many blacks or Hispanics would vote for her.
Patrick Buchanan and others have already chronicled “the death of the West,” but we need to understand the laws of this process, because it follows a pattern of false hopes, interspersed with successive betrayals by white leaders.

American whites could become a minority much sooner than they think. That has been our experience in South Africa; people appreciate the enormity of change only after it is too late.

[kaboomnomic]

Well.. well.. well... after wrecking Brasil economies, US/UK alliance now aftering South Africa, eh? While keeping pressures on China & Russia. India at the moment can still defend herself. It backfires spectacularly om China & Russia.

China by itself can bailout both Brasil & SA, should they smart enough to asked China, instead of IMF. Braail have been given loans by China already, from the news i read. SA can't read their attitudes. Would have to read some more about SA.

It is a good signs, that at least RIC from BRICS can weather this typhoons. If they can stand at least 2 year? (Which i have high confidence for this RIC) The EU/JA/US will start unwinding in 2016. And it will reachs disastrous level by 2017.

China devaluing Yuan (preparing for printing yuan, cause other nation start piling up yuans. In time of crisis? You piling up fx that valued LESS than other fx nominations. Still can't see china massive preparations?), AND, dumping FX from EU/JA/US is a sign China knows, more bad weather coming the future 2 years ahead.

By the time unwinding of JA/EU/US started in 2016? You'll find plenty of mint fresh printed yuan's available for your reserves).

And once thank God, i'm not living in JA/EU/US. I live where daily 3x meals cost just 4.5 US$. I'll be watching which any of you can still posting here, and spew out hatred for this BRICS nations when the unwinding comes..

[kaboomnomic]

????

[Gold_Spot]

This is not, I think some foul game coming from USSA but rather the outcome of kaffirasation or niggarisation. Just another example of when you put thse monkeys into power, that is what you get: Zuma, Obama, Amin, Mugabe.....

[Sizzurp]

Whitey has also done a good job destroying, take a look at Europe lately? I don't think blacks are alone in this regard.  You could maybe argue that they are a little more efficient at destruction, but they hardly have a monopoly.  As I said, along with numerous others, once you allow democracy to vote on matters such as confiscating the wealth and property of others, you have institutionalized theft, and the mob will slowly but surely destroy your civilization.  All humans are subject to the same traits, given the chance, they like to steal. 

[Miss Expectations]

Did someone say "power constraints?"  Really?  How about The Infrastructure Crumbles:

http://newobserveronline.com/south-african-electricity-supply-infrastruc...

Only sixteen percent of blacks in the sprawling South African township of Soweto, Johannesburg, pay for their electricity, while South Africa’s electricity supply infrastructure is rapidly crumbling due to incompetent Third World management and lack of maintenance.

[Miss Expectations]

South Africa had the potential to serve as a great example of the cause of human equality winning out over prejudice and political injustice. Unfortunately, the far-left seized the opportunity to institute their policies of perpetual poverty, violence and race hatred. The failure of South Africa is the failure of the world to acknowledge this reality. Where it might have been a model for other nations, it instead stands as a dire warning -- while the toxic seeds of leftist politics grow elsewhere, including in our own backyard.

http://www.frontpagemag.com/fpm/258718/ongoing-tragedy-post-apartheid-so...

[danepol]

South Africa remains a magnificent country to visit and for cheap too. Forget politics and overblown negative press. You can shiver at home or frolic in the sun for the same money.

[RagnarRedux]

It doesn't matter where blacks happen to be geographically located on the globe or what is given to them, collectively this is their genetic plight, and it becomes a social blight. They just do not have enough collective Average General IQ capital, and sparse individual exceptions are just that, exceptions. British scholar and Royal Geographic Society Fellow, Hesketh Prichard, wrote about his experience in Haiti in a sympathetic and unbiased manner, and his observations are relevant and still hold true today.

The Lesson Of Haiti

https://www.youtube.com/watch?v=hmJLh3QCNgM

https://www.facebook.com/BlackPeoplesFreedomHaiti1804/posts/234597490017925

[deerhunter]

South Africa is a lovely country.  I have traveled there and have native Afriakaaner friends who live there.  The nation is one of the most violent on earth.  The rapes and murders are insane there.  Before we here look at the nation as a great destination for vacations which it truly is you must take off the rose colored glasses.  South Chicago has nothing on South Africa as far as murders and violence.  I read somewhere since the end of apartheid there have been 40K expats move just  to the Chicago metro area.  These are not the street thugs that flee a country when it is no longer safe to raise a family.  It is a brain drain of the talented and financially able to leave that migrate.

Guard dogs,  razor wire,   gated communties and security companies are the norm not the exception.  If you have to leave your family at home wondering if they will be alive when you return then no matter how much money you make when does it become no longer viable?  It is a lovely country.  It has now become Zimbabwe Lite.  Sad. Is it fixable?  Time will tell. 

I still plan to travel there again.  It has some incredible hunting opportunities and lovely beaches and wilds.  Big cattle country and many types of topography.  There is a plethora of things to keep a tourist busy.  I personally have never felt threatened in any way.  Mind your Ps and Qs and if you have wander lust go while the country is still a viable option.  15 to 1 is an incredible exchange rate.

50 years from now or less America will have the same fate.  Glad I am 60. 

[Cryogenic]

And then you have to take this dumb f#ck of a president serious, what an idiot!

https://www.youtube.com/watch?v=nqNa6992ih4
https://www.youtube.com/watch?v=DClelfRo_Wg