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Authorised Financial Services Provider – FSP No: 859

Authorised Financial Services Provider – FSP No: 859. The Volatile Global Economy Where do we stand?. Presented by: Dawie Roodt IEASA Conference 17 June 2009. Where did the Trouble Start?. U.S. Interest Rate. Subprime Market Emerges…. Nasdaq Bubble.

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Authorised Financial Services Provider – FSP No: 859

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  1. Authorised Financial Services Provider – FSP No: 859

  2. The Volatile Global EconomyWhere do we stand? Presented by: Dawie Roodt IEASA Conference 17 June 2009

  3. Where did the Trouble Start?

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

  5. 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

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

  7. U.S. Interest Rate Subprime BubbleBursts Nasdaq Bubble Inflation Credit Crises Source: I-Net, Efficient Research, 2009

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

  9. Emergency Rescue Plans U.S. $700bn bailout package Cut interest rate to near zero Fed doubles its auctions to banks ($900bn) Quantitative Easing etc. Huge fiscal stimulus – state debt soars U.K. & Europe Purchase of preference shares in institutions BOE & ECB Interest rate cut to historic lows & more to follow? Guarantees private & retail deposits Quantitative Easing in U.K. etc. Huge fiscal stimulus – state debt soars IMF China Cuts i% G20 Meeting Germany €400bn $$$

  10. Consequences.. Financial Markets Real Economy

  11. Economic Growth First Combined Recession since WWII Source: IMF World Economic Outlook, 2009

  12. What About Us?

  13. Economic Position; 2008 (PPP US$) Brazil, Russia, India “Other” – SA 30th Canada Spain Source: World Fact Book, 2008

  14. Countries Compared to Provinces Source: UN

  15. Slowing International Demand Slower Growth Other8.0% Recession Source: SARS, 2008

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

  17. Important Indicators

  18. C/A Deficit Funding ?? “Hot Money”-DANGER- Source: SARB, 2009

  19. Balance of Payments Source: SARS and own calculations

  20. Important Indicators

  21. Dollar Strength Source: I-Net, 2009

  22. Rand Weakness Source: I-Net, 2009

  23. Commodity Prices Mid-2002 level Source: I-Net, 2009

  24. Important Indicators

  25. Inflation CPI Average 2009: 7.0% Source: StatsSA and own calculations

  26. Real Interest Rates Source: StatsSA and own calculations

  27. Real Interest Rates Zero Source: Efficient Research, 2009

  28. Important Indicators

  29. Household debt to disposable income 200876.7% 59.4% 56.9% 50.2% 44.5% Source: SARB and own calculations

  30. Savings to disposable income of households 9.2% 5.4% 2.6% 0.5% 2008-0.4% Source: SARB and own calculations

  31. Important Indicators

  32. Die Recession Topic TechnicalRecession Source: StatsSA and Efficient Group forecast

  33. GDP Sectors

  34. GDP Sectors

  35. Important Indicators

  36. Revenue and Expenditure

  37. Spending Priorities

  38. Social Grants Beneficiary Numbers Source: 2008 Budget 2009: 13,4m recipients 28.0% of SA population

  39. Fiscal Balance Source: SARB Forecast: Efficient Group

  40. State Debt Domestic debt: R485.5bn Foreign debt: R81.9bn Source: SARB Forecast: MTBPS, Efficient

  41. Housing Trends

  42. Housing Trends Gold Low interest rates Pre-ElectionUncertainty Rubicon Speech Sub-Prime Asian Crises Source: Absa House Price Index, StatsSA and own calculation

  43. Monthly Mortgage Repayments (Calculated over period of 20 years) Household savings…? Source: Absa Interest Rates and Property, May ’09

  44. Factors impacting the property market – Sellers’ View Source: FNB Property Barometer, Q109

  45. How Hot is the Market…? 2009Q1: 86.0% Source: FNB Property Barometer, Q109

  46. How Hot is the Market…? 5months 1month Source: FNB Property Barometer, Q109

  47. Absa House Price Index April 2009: -10.7% y/y (real) Source: Absa House Price Index, May ’09

  48. Any Opportunities…? 2009Q1:15.0% Source: FNB Property Barometer, Q109

  49. Any Opportunities…? 2009Q1:11.0% Source: FNB Property Barometer, Q109

  50. Asset Classes

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