South Africa Ratings Cut to Junk by Fitch

The transcript discusses the downgrade of South Africa's credit rating to junk status by Fitch, highlighting its impact on both foreign and local currency ratings. This downgrade affects the bond and currency markets, raising concerns for fixed income investors. The transcript also explores the potential political implications, including a vote of no confidence against President Zuma, and the fear of policy shifts away from fiscal consolidation. The discussion emphasizes the uncertainty surrounding South Africa's economic and political future.

What was the immediate market reaction to South Africa's credit rating downgrade?

• The currency strengthened against the US dollar.

• The bond markets showed increased stability.

• The currency extended losses, trading lower against the US dollar.

• The stock market experienced a significant rally.

What is a potential consequence for South Africa if another agency downgrades its local currency rating?

• Improved credit rating.

• Removal from the World Government Bond Index.

• Increased foreign investment.

• Strengthening of the local currency.

What is the main concern of ratings agencies regarding South Africa's economic policy?

• An increase in foreign aid.

• A focus on nuclear spending over fiscal consolidation.

• A shift towards fiscal consolidation.

• A reduction in government spending.

What political event is President Zuma facing that could be influenced by the credit downgrades?

• A leadership summit.

• A referendum on economic policy.

• A vote of no confidence.

• A general election.

How many votes of no confidence has President Zuma survived in the past?

• Two

• Four

• Three

• Five