Latest news with #CitadelGlobal
The Citizen
5 days ago
- Business
- The Citizen
Will SA finally be off the grey list after Financial Action Task Force visit?
The Financial Action Task Force greylisted South Africa due to its failure to comply with its standards and measures. The Financial Action Task Force concluded its on-site assessment of South Africa during the last week of July, the last step before the October 2025 Plenary can consider whether to remove South Africa from its grey list. Countries must comply with the Financial Action Task Force (FATF) standards and measures to combat illicit financial flows, terrorist funding and potential threats to the integrity of the global financial system. The FATF is an intergovernmental body established to protect financial systems and the broader economy from threats of money laundering and the financing of terrorism. Greylisting subjects the financial services sector to increased scrutiny and stricter regulations to ensure that it addresses the deficiencies in its anti-money laundering and counterterrorism financing systems. It serves as an early indication that the country's financial system is at risk of misuse for illegal purposes, Bianca Botes, director at Citadel Global, said at the time. 'The logical consequence is detrimental to South Africa's international reputation as it is seen as a high-risk jurisdiction for financial transactions, making countries hesitant to engage in financial and law enforcement cooperation.' ALSO READ: South Africa was greylisted due to endemic corruption SA had to upgrade laws for Financial Action Task Force South Africa had to upgrade its anti-money laundering and counterterrorism laws and regulations, implement improved supervision of financial institutions and enhance the country's ability to investigate and prosecute money laundering and terrorism cases. In addition, South Africa had to complete this by January this year, but problems with compliance on the side of some estate agents and lawyers slowed the process down. However, the FATF announced in June that the country had substantially completed all 22 action items in the action plan adopted. The FATF decision noted that South Africa's progress warrants an on-site assessment to verify that critical reforms, including anti-money laundering and the combating of the financing of terrorism reforms, have been implemented and that the necessary political commitment remains in place to sustain progress. The FATF Joint Group held meetings with South African government officials and representatives of financial institutions and designated non-bank financial institutions. At the conclusion of the meetings, the FATF Africa Joint Group held a meeting with Deputy Minister of Finance David Masondo and Deputy Minister of Justice and Constitutional Development Andries Nel. They assured the FATF of government's commitment to continue to improve the country's anti-money laundering and the combating of the financing of terrorism (AML/CFT) system. ALSO READ: South Africa making more progress to get off FATF grey list All eyes now on FATF meeting After the onsite visit, the FATF Africa Joint Group will submit a report to the October 2025 FATF Plenary, which will consider any recommendations from the report on whether South Africa can be delisted from the FATF grey list. According to a statement from National Treasury, Masondo and Nel assured the FATF Africa Joint Group that government will continue to actively partner with the FATF Global Network in preserving and advancing the integrity of the South African and global financial systems.
The Citizen
15-07-2025
- Business
- The Citizen
US tariff of 30% on SA exports: where to now?
Sky-high duties will hit dozens of US trading partners, as Trump pushes for more "reciprocal" or 'fair' trading terms. The new tariff of 30% president Donald Trump levied on South African exports to the US, as well as tariffs up to 50% on other countries, have reignited global tensions as the 90 day pause on the tariffs announced in April came to an end last week. Bianca Botes, director at Citadel Global, points out that it signals a sharp escalation in Trump's protectionist agenda. The latest round of tariffs include: Japan and South Korea: both were hit with 25% tariffs from 1 August. Trump cited trade imbalances and is pushing for local production in the US as the reason. Dozens are in the firing line, with over a dozen countries, including South Africa (30%), Bangladesh (35%), Brazil (50%) and Thailand (36%) facing increased tariffs. More are expected to follow, with an announcement of 30% tariffs for Mexico and the EU on the weekend. Brics, commodities and pharmaceuticals: A blanket 10% additional tariff on Brics imports was announced, along with a 50% duty on all copper imports, as well as a possible 200% tax on pharmaceuticals. ALSO READ: Ordinary South Africans will feel impact of US tariffs Lacklustre reaction from markets in response to US tariffs The market reaction was lacklustre and Botes says it seems that the markets are waiting for the dust to settle with minor responses in equities, which are currently hovering near record highs and some weakening in emerging market currencies, but not nearly to the extent that we witnessed in April. She also noted a global pushback, with affected countries exploring retaliatory measures or seeking last–minute talks, while the White House insists that 1 August is a firm deadline. 'The rest of July could be pivotal. Between Trump's hard tariff line and the Fed's cautious monetary policy stance, economic uncertainty is running high. Trump's aggressive approach may disrupt global supply chains and relations with allies and emerging markets alike. All eyes are now on incoming data and how markets, governments and central banks respond to what could be an unpredictable end to the month.' ALSO READ: Trump's new 30% tariff less about trade and more about power No mention of 10% US tariff for Brics in South Africa's letter Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research, says although Trump warned that any country adopting the anti-American policies of Brics would face an additional 10% tariff, there was no mention of this in the letter South Africa received. Fellow Brics member Brazil got slapped with a 50% tariff on Wednesday. 'Unlike most countries facing reciprocal tariffs, Brazil runs a trade surplus with the US, importing more from the US than it exports, Trump makes it clear in his letter that the reason is political and he intends to penalise Brazil for the 'witch hunt' on former president Jair Bolsonaro.' De Schepper points out that Brazil is the US's largest coffee supplier and a significant supplier of iron ore. 'Trump, perhaps fearing that some of the reciprocal tariffs may be struck down by the courts, has ordered a so-called section 301 investigation into Brazil specifically. While this will take time, it could be a basis for sustained tariffs going forward.' ALSO READ: China's clever trade deal with Africa – removal of tariffs on most goods Trump: US tariffs based on 'common sense, deficits and raw numbers' President Cyril Ramaphosa responded to the announcement of the US's tariff by saying that the calculation it is based on uses the wrong data. Trump explained later in the week that the reciprocal tariffs are based on 'common sense, deficits, how we have been over the years and raw numbers'. She says arguing about the accuracy of data is therefore unlikely to sway his position. 'Hopefully, by highlighting what South Africa can offer the US and being pragmatic, there is some scope to wiggle down the tariff, as some other countries have successfully done. 'However, the 'worst case' of a 10% universal tariff that government hoped for now looks to be turning into a best case. However, a fair point made by the Financial Times is that there is unlikely to be a 'definitive policy' in a Trump world. While we expect the impact on the entire economy to be relatively small, some motor manufacturing and pockets of agricultural produce will be hit hard.' ALSO READ: Where Trump's tariffs will hurt most US 30% tariff on SA a seismic event, not a diplomatic spat Dr Ernst van Biljon, head lecturer and programme coordinator for M Com in supply chain management at the IMM Graduate School, says the sweeping 30% US tariff on 'any and all South African products,' is far more than a diplomatic spat. It is a seismic event poised to send ripple effects through global and South African supply chains, demanding an urgent re-evaluation of supply chain strategies. 'While global markets have always been dynamic, this escalation signals a deeper shift: the weaponisation of trade policy as a geopolitical tool.' He says from a global perspective, these tariffs immediately compel US-based importers and retailers to de-risk their supply chains. 'The 30% duty instantly inflates the cost of South African goods, making them less competitive on American shelves. This is not just about price but about the very viability of product lines. 'Supply chains in the US will face pressure to absorb costs, pass them to consumers, or seek alternative sourcing. This could accelerate trends towards 'friend-shoring' or 'near-shoring', where companies prioritise suppliers in politically aligned or geographically closer nations. 'The ability to guarantee consistent product availability and predictable pricing, even if it means re-evaluating long-standing supplier relationships, will become a key differentiator.' ALSO READ: Trump tariffs unsettle SA farmers as Africa eyes agricultural growth US tariffs could trigger global re-routing of goods Furthermore, he says, the tariffs could trigger a global re-routing of goods. 'South African products previously destined for the US might now seek new markets, potentially increasing supply in other regions and creating new competitive dynamics.' He warns that South African businesses cannot simply 'find new markets' or pivot messaging but must reimagine their entire value chain strategies. This means investing in regional value chain integration, leveraging SADC, Brics and AfCFTA frameworks and accelerating partial local beneficiation to improve resilience. For South Africa, the implications are immediate and profound, Van Bijon says. 'Businesses, particularly those in export-heavy sectors like agriculture, must urgently identify and cultivate new international markets beyond the US. 'This requires intensive market research and in the case of China, considerable persistence, to understand new consumer preferences and tailor product offerings and brand narratives for diverse audiences in Asia, the Gulf and within the African continent. 'Specific sectors such as citrus, wine, nuts and automotive components are directly in the crosshairs. Producers in these industries should consider building capacity for processing at source and establishing stronger ties with fast-growing Asian and Middle Eastern markets.' ALSO READ: Government must intervene with US tariffs, act stronger with police corruption Waiving US tariffs on goods made in the US? He says the US offer to waive tariffs if companies 'build or manufacture product within the United States' presents a stark choice. 'While some large corporations might consider this, it threatens to hollow out local manufacturing capabilities and job creation. 'From a domestic supply chain standpoint, this situation could galvanise 'Buy Local' campaigns, fostering national pride and consumer loyalty towards South African-made goods to bolster internal demand.' In addition, Van Biljon says, companies should assess opportunities to increase local supplier development and upstream integration to reduce reliance on single-market exports. 'Strengthening links with regional and Asian supply partners can enhance both resilience and cost competitiveness. 'The true opportunity is not in survival but in transformation — future-proofing South Africa's role in global supply chains through strategy, value creation and new market development.'
IOL News
09-07-2025
- Business
- IOL News
Cautious sentiment sets in as dollar firms and rand edges weaker on tariff fears
A cautious tone is taking hold in global markets as investors digest renewed US trade threats, with the dollar gaining ground and the rand edging weaker. The shift follows US President Donald Trump's announcement of steep new tariffs, which has added to uncertainty and pushed some investors toward safer assets. 'After President Trump announced a new round of tariffs [Monday] evening, we have seen risk-sentiment starting to wane as the market is trying to take stock of what this could mean,' said Wichard Cilliers, Director and Head of Market Risk at TreasuryONE, on Tuesday evening. He noted that this change in sentiment had already affected emerging market currencies, with the rand 'presently flirting with the R17.90 level… ending the South African session on R17.86'. As of 1pm, the local currency was trading at R17.82 to the dollar. Bianca Botes, Director at Citadel Global, noted that the dollar had strengthened in response to the developments. 'The dollar remained firm, near a two-and-a-half-week high, following yesterday's rally, as global markets absorbed a fresh wave of US trade threats,' she said. This includes Trump's announcement of a 50% tariff on copper, which sent US copper futures more than 10% higher to a record level.
IOL News
07-07-2025
- Business
- IOL News
Rand weaker on Trump's BRICS tariff threat
Trump warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty. The rand weakened on Monday as markets digested renewed geopolitical risk sparked by US President Donald Trump's latest move to target BRICS-aligned countries with additional tariffs. Trump extended the deadline for new trade tariffs to August 1 and warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty. The fresh threat unsettled emerging markets and hit sentiment across global trading floors. 'Global markets opened the week on edge as President Trump reignited trade tensions ahead of the July 9 tariff deadline,' said Bianca Botes, director at Citadel Global. 'While only Britain, China, and Vietnam have struck deals, a dozen nations are expected to receive tariff letters starting today.' Currency strategist at TreasuryONE, Andre Cilliers, said the announcement put pressure on risk-sensitive currencies. 'BRICS currencies, along with EM markets, have come under pressure this morning with the rand weakening.' By mid-morning, the local unit had slipped to R17.71 to the dollar, from R17.50 last week Thursday. South Africa's political alignment is also in the spotlight. 'South Africa-US relations remained strained with the introduction of the US-South Africa Bilateral Relations Review Act in Congress,' Cilliers noted. The legislation is set to examine South Africa's foreign relations, particularly with China and Russia, as well as alleged human rights violations, he said.
The Citizen
20-06-2025
- Business
- The Citizen
Weekly economic wrap: Bad news for oil prices, rand soldiers on
While the week was uneventful on the local economic front, the same cannot be said for the international picture for oil prices. As expected, the week brought bad news for oil, but thankfully not such bad news for the rand as Israel and Iran entered a full-blown war after Israel struck Iran's nuclear facilities last week. Closer to home, inflation remained the same in May, while retail sales showed a solid performance in April. Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research (BER), points out that so far none of the global superpowers has directly become involved in the Israel-Iran war, with US president Donald Trump saying that he will decide in the next two weeks what to do, although he already approved attack plans. 'In commodity markets, there is good news with a higher platinum price and bad news with a higher oil price for South Africa's trade dynamics. The platinum price jumped to a more than 10-year high this week, supported by demand from China, sustained investor interest and concerns about a deficit in the market, with demand outstripping supply. 'On a negative note, the oil price surged higher this week and is currently almost 20% above the price at the start of the month. Iran directly supplies about 3 million barrels of oil to the market per day, and this could technically easily be made up by a country like Saudi Arabia, which is still voluntarily cutting back production. 'However, the real concern is that freight in the Strait of Hormuz, which channels about 15% of the world's oil and 20% of liquid natural gas, is disrupted. Oil continues to flow, but prices to charter large oil tankers sailing through the strait have already more than doubled from last week.' ALSO READ: What Israel–Iran conflict means for South African economy Oil prices surge as Israel-Iran war heats up Bianca Botes, director at Citadel Global, agrees that the recent outbreak of war between Israel and Iran has significantly unsettled global energy markets, with profound implications for oil prices, the global economy, and Middle Eastern power dynamics. 'This escalation triggered immediate volatility in oil markets, with Brent Crude and West Texas Intermediate (WTI) prices surging by over 4% from the start of the conflict, seeing Brent reaching around $76/barrel and WTI surpassing $75/barrel. Since the start of the conflict, oil futures have risen approximately 10%, reflecting market anxiety over potential supply disruptions. 'Iran is OPECʼs third-largest oil producer, extracting about three million barrels per day. Despite sanctions limiting its exports, Iran remains a significant player, especially in supplying China and India. The conflict threatens Iranian oil production and shipping routes, notably the Strait of Hormuz.' Botes points out that analysts warn that oil prices could spike to $100 per barrel or even $120 per barrel if supply through the Strait of Hormuz is disrupted. 'Such a price shock would reverberate through global markets, impacting inflation, consumer costs, and economic growth worldwide. 'Brent Crude Oil futures fell below $73/barrel, but are still set for a third consecutive weekly gain. Fears of supply disruptions due to the ongoing conflict supported prices, even as Iran continues to export crude at high levels. A sharp drop in US crude inventories earlier in the week also helped keep oil prices elevated.' She says gold prices dropped below $3 360/ounce, nearing a one-week low and heading for their first weekly decline in three weeks. 'Investors have been selling gold to cover losses in other markets, and the prospect of no or gradual interest rate cuts limited gold's appeal.' ALSO READ: Israel vs Iran: Why you may soon have to pay more for petrol in South Africa The rand soldiers on De Schepper says the rand exchange rate held up well during the week, but depreciated slightly against a stronger dollar on Thursday and closed the week weaker against the dollar, euro, and pound. Botes notes that the rand is bouncing between R17.90/$ and R18.10/$, showing a slight weakening trend since its recent rally. 'The rand's performance was largely influenced by global risk sentiment and fluctuations in commodity prices. 'Compared to other emerging market currencies, the rand has held up well in recent sessions, despite ongoing uncertainty in global markets and the impact of international developments on investor appetite for risk assets.' Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit, point out that the rand broke through R18/$, dropping to its lowest level since the second week of May as global risk aversion spiked and investors dumped emerging market assets. 'The local currency touched R18.15/$ on Thursday evening before recovering to around R18.01 this morning, down 1.2% from R17.80 on Monday.' The rand was trading at R17.99/$ this afternoon. ALSO READ: Inflation unchanged in May at 2.8% as economists expected Inflation remains at 2.8% in May According to the latest release from Statistics SA, inflation stayed below 3% in May at 2.8%, the same as in April. The largest contributions came from food and non-alcoholic beverages, which increased by 4.8%, primarily driven by higher meat prices. Katrien Smuts, economist at the BER, says while the recent foot and mouth disease outbreak put pressure on red meat prices, it was not the sole driver. 'Prices were already trending upward for several months and some analysts suggest the impact may be short-lived. Outbreaks often lead to export bans, which can increase local supply and place downward pressure on domestic prices. 'The ban on poultry imports from Brazil, due to an avian influenza outbreak, is expected to be temporary and limited to affected areas. While Brazil is a key poultry supplier to SA, the impact is also only expected to be short-lived.' Nkonki and Matshego say inflation remaining steady at 2.8% in May was in line with market expectations but higher than their 2.3% forecast. 'The primary contributor was food prices, although increases in housing, utilities and alcoholic beverages also played significant roles. Despite ongoing downward pressure from fuel prices, persistent price increases in other sectors shaped the overall inflation landscape.' Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, note that fuel prices dropped sharply, but warn that risks from a weaker rand and rising global oil prices could reverse this trend. 'Despite current disinflation, geopolitical tensions and trade uncertainty ahead of the July Monetary Policy Committee (MPC) meeting suggest that the South African Reserve Bank (Sarb) will likely maintain a cautious stance and hold rates.' ALSO READ: China's clever trade deal with Africa – removal of tariffs on most goods Increase in retail sales in April, but motor trade decreases Statistics SA's latest retail trade sales data showed another solid performance in April, with sales increasing by 0.9% compared to March and 5.1% compared to a year ago. The main driver of growth was the general dealers' category, which increased by 5.3%. Despite another steep annual decline of 6.5%, wholesale trade sales perked up by 0.9% compared to March. However, motor trade sales decreased by 1% compared to March and by 0.9% compared to a year ago. Smuts says while the muted inflation print provides some welcome relief and April retail sales showed the consumer has some strength, the question is how long this can be sustained. 'Real incomes are squeezed amid unchanged personal income tax brackets, a pending electricity tariff hike in July and an increase in the fuel levy.' Nkonki and Matshego expect the upward momentum in retail sales to continue, supported by rising real incomes, subdued inflation, continued withdrawals of contractual savings and lower debt servicing costs compared to a year ago. Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano point out that despite April's strong performance, retail activity over the past three months remains 0.5% lower compared to the preceding three-month period, suggesting that household spending may be losing momentum. 'The spike in annual sales likely reflects holiday-related spending and two-pot pension withdrawals coinciding with the new tax season.'
