SOUTH AFRICA: ANC May Seek Support For Budget Outside Of GNU W/No Deal In Sight
With just over an hour left to the 2025 Budget Speech there are still no signs that the African National Congress (ANC) managed to convince its partners from the Government of National Unity (GNU). Latest reports from the ground suggest that Finance Minister Enoch Godongwana will announce a downsized VAT rate hike and negotiate with other parties from there, with overtures to the opposition very much on the table.
- TimesLIVE reports that "the ANC is confident it can pass the budget without its partner the DA, with some insiders saying the party has approached political parties outside the government of national unity (GNU) to secure finance minister Enoch Godongwana's proposals after an impasse on the VAT increase."
- Separately, News24 reporters note that Godongwana will likely present a VAT increase "significantly smaller than the two-percentage-point hike proposed in last month's budget." In addition, "as of Tuesday evening, talks between the ANC and the DA had failed to reach a resolution."
- Democratic Alliance (DA) spokesperson Karabo Khaukhau told Radio 702 this morning that GNU parties have failed to reach agreement on the way forward and "the DA will not, under any circumstance, approve a VAT hike," which in its view would "increase the levels of inequality."
- Meanwhile, ANC Chief Whip Mdumiseni Ntuli said that "following successive constructive engagements within the ANC and between the GNU partners, the caucus is confident that Minister [Enoch] Godongwana will table a Budget that is balanced and appreciative of the difficult choices that need to be made in a low economic growth environment."
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OUTLOOK: Price Signal Summary - EUROSTOXX50 Uptrend Remains Intact
- In the equity space, the Feb 3 initial sell-off in the S&P E-Minis contract and the breach of support at 5948.00, Jan 27 low, continues to highlight a possible S/T reversal threat. A resumption of weakness would open 5892.37, the 76.4% retracement of the Aug 5 - Dec 6 bull leg. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 ‘24 high. Clearance of this hurdle would resume the primary uptrend.
- EUROSTOXX 50 futures are holding on to their recent gains and a bull cycle remains in play. Last week’s gains marked a resumption of the uptrend that started on Nov 21 ‘24. The focus is on 5381.13 next, the 1.764 projection of the Nov 21 - Dec 9 - 20 ‘24 price swing. Initial firm support to watch lies at 5211.11, the 20-day EMA.
EU-BOND SYNDICATION: Mandate: 2.50% Dec-31 EU-bond / 3.25% Feb-50 Green EU-bond
"The EU has mandated Citi, Deutsche Bank, HSBC, Morgan Stanley and Société Générale as Joint Lead Managers for its upcoming EUR Fixed Rate RegS Bearer dual tranche transaction comprising an increase of the EU 2.500% benchmark due 4 December 2031 (EU000A3L1DJ0) and an increase of the green EU 3.250% benchmark due 4 February 2050 (EU000A3K4EU0). No further group. The transaction will be launched tomorrow, subject to market conditions."
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EURIBOR OPTIONS: Call Condor buyer
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