The top 5 South African banks, Standard Bank, FirstRand, Absa, Nedbank and Investec together with 3 development finance institutions, 10 regional and local governments, were all downgraded by Moody’s on Monday.
While local and foreign currencies were downgraded on Friday from Baa2 to Baa3. Moody’s said this was due to a maintained negative outlook, with the South African government’s credit profile and institutional strength weakening and a pronounced economic slowdown.
Trading on the JSE on Monday at 20:40 saw the rand stronger against the dollar up 0.92 percent, the downgrades having had little effect. Before the news of the downgrades and following the news the banks saw mixed trading with Barclays Africa gaining 1.71 percent, Nedbank shed 1.95 percent, Standard Bank gained 0.77 percent together with FirstRand who gained 0.7 percent, Investec slid 0.68 percent.
As of March 2017, the South African Reserve Bank reported that the overall sovereign exposure by the top 5 banks which included loans to state related entities was at an average of over 150 percent of their capital bases.
A GDP growth of only 0.8 percent in 2017 is forecast by the rating agency and 1.5 percent in 2018, well below the target growth of the SA government.
David Maynier the finance spokesperson for the Democratic Alliance opposition party said that the downgrades of the 5 largest banks by Moody’s is the result of President Jacob Zuma’s cabinet reshuffle. The negative effect is spreading throughout the economy like a disease.
South African traders are uniquely situated with breaking news and developments happening on their doorstep. They can take advantage by taking the bull by the horns and start trading with the premier social forex broker eToro.
Hook-up With 4M Traders
eToro has over 4 million users on their social networking site allowing traders to sign up via Facebook and make posts and comments on Twitter and LinkedIn.
Become an Expert and Practice Trades for Free
Try their unlimited demo account for free, it comes with $10,000 virtual money to practice trades, it even comes with live rates like the real deal.
New Offering of Cryptocurrencies
eToro now offers two of the largest cryptocurrencies, Bitcoin and Ethereum for traders, as the number of users has grown fourfold in a twelve month period. They will also be launching more cryptocurrencies such as Ripple and Dash, in the near future to expand their offering.
eToro is regulated by the Cyprus Securities and Exchange Commission, their unique trading platform is straightforward and easy to use.
Try it for yourself with their free demo account!
*Trading forex and CFDs can be a risk to your investments. You should only trade with money that you can afford to lose.