Daily Market Report – 28 May 2025

Mining Policy Misfire: Industry Confidence Rattled Again

What’s Wrong with the Amendment Bill?

• Minerals Council criticises:
  • Lack of consultation
  • Continued inclusion of BEE rules for prospecting firms
  • Ignores repeated calls to exclude high-risk exploration from empowerment

Market Repercussion

• Investor Trust Damaged: Dismissal of industry feedback signals regulatory unpredictability.
• Sectoral Malaise Deepens: SA’s mining-to-GDP ratio has been in long-term decline.
• GDP Growth Impact: Missed opportunity for inclusive reform could shave growth expectations further.

FX Market: ZAR Overbought, Bracing for a Catalyst

What’s Shifting?

• ZAR’s run has technically peaked — multiple indicators show exhaustion
• BEE backlash in mining and fiscal pushback (e.g., fuel levy hike) add domestic pressure
• Ahead of SARB, traders wary of giving up ZAR carry exposure just yet

Directional Call:

• Base formed at 17.7900, potential correction up to 18.0650
• If SARB cuts + dovish tone, expect probe toward 18.20–18.30
• If SARB holds + flags 3% target, ZAR may test 17.60s

FRA Curve & Bonds: Mixed Signals Ahead of SARB

FRA Pricing

Bond Curve Behavior

• R2053 demand rising = Long-end support improving
• Recent SAGB auctions positive, despite budget stress
• Curve still steep, reflecting unresolved fiscal risks

Takeaway:

• SARB’s inflation mandate clarity will shape curve trajectory:
  • Announce 3% target: flattening
  • More cuts without target change: further steepening

Global Risk & USD Dynamics

Dollar Index

• DXY holding above 99.50, buoyed by yen weakness and durable goods data
• USD/JPY up as Japanese long bond yields plunge (BoJ/MOF might cut issuance)
• EUR and GBP facing consolidation after strong gains; EUR/USD dipped below 1.3000

External Risks to Watch:

• • US-EU tariff drama delayed but not resolved (next flashpoint: July 9)
  • Global bond markets remain jittery, reacting to issuance plans and fiscal forecasts
  • BoJ and ECB policy signals due mid-June will feed into risk sentiment

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