Emerging Markets

June 27, 2014

By: Darren Viegas

Platinum Union Declares End To South Africa’s Longest Strike

Fantastic news out of South Africa as the AMCU union has declared South-Africa’s longest ever platinum strike officially over. The spot price of platinum fell 1% as the rand rose 1% against the dollar. Wage deals will be signed for Tuesday and workers will be back on duty for Wednesday. A deal was struck with the union members settling for monthly increases 1000 Rand a month. The strike at its peak hit 40% of the total production of Palladium, a huge component of catalytic converters. Revenues are set to be bleak for the next few weeks as mines are being restarted.

This news is exactly what South Africa needed for its G2 GDP numbers, moreover what it needed to stop a recession. With their largest sector back to work, we should see more investor confidence in the South African economy- as seen by the Rand’s rally. Looking forward, as the current account deficit is decreasing and the palladium industry is back to work, South African policy makers will have to take initiatives to tame a rising inflation.

Investors Prepare For Volatility Ahead Of Indonesian Election

A huge event soon looms for the emerging markets-the Indonesian presidential election. Jakarta governor Joko Widodo has a strong lead in the poll which has rallied stock 13% this year. The Rupiah has rallied 1.6% against the USD, ending from its sell-off in summer 2013. According to fund managers and analysts, a favorable election would negate the negative sentiment coming from Indonesia’s status as a fragile five. If Widodo loses, there will be great political uncertainty which would be negative for the market

This will be a huge event for the emerging markets. We may see another loss of confidence in the Indonesian Rupiah if the popular candidate- Widodo, is not elected.

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