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Coronation has offices in Europe where they sell investments in Africa. They are listed on the stock exchange in Berlin as well. CML Berlin chart is almost a mirror image of ours.

European markets gained late yesterday after Fed Chairman Ben S. Bernanke said in a testimony to the Joint Economic Committee of Congress in Washington that reducing stimulus measures too soon would endanger economic recovery.

U.S. stocks, which had rallied on those comments, later fell after Bernanke indicated that the central bank will scale back stimulus if economic conditions improved. He said the flow of purchases could be reduced “in the next few meetings” if the Fed is confident gains in the economy can be sustained.


Chinese Manufacturing

In China, a report showed manufacturing is contracting in May for the first time in seven months. The preliminary reading of a purchasing managers’ index for Chinese manufacturing declined to 49.6 in May from 50.4 the previous month, HSBC Holdings Plc and Markit Economics said today. That missed the 50.4 median estimate in a Bloomberg News survey. A reading below 50 signals contraction.

So what is causing the current run on the rand? The following factors are all lining up and already causing a bit of a gale:
The end of the commodity super cycle. Last month two large financial institutions, Citibank and Credit Suisse, published detailed reports on the commodity super cycle, both saying the cycle is dead and buried.
US Dollar (USD) strength. The USD moves in very large and pronounced cycles. I follow the ICE dollar index (code DXY on the New York stock exchange) which measures the USD against its six major trading partners. Since July 2011 this index has moved from 73 to its current level at 84 –a major move for the dollar.
SA leading economic indicators turning down. Earlier this week the Reserve Bank published its leading economic indicators, most of which had turned down in the first quarter of the year.
Deficit on the current account of the balance of payments. The slowdown in export volumes and a drop in prices of our major export products is causing havoc with the balance of payments and last year the country recorded its largest deficit on record.
Last week Treasury reported to Parliament that the budget deficit would average 6.5% of GDP over the next three years. This report, which attracted very little news analysis, points to a much higher deficit than was forecast in the budget, less than three months ago.
Outflow of foreign money from the local bond market. This, in my view, is the single most important indicator when it comes to the outlook for the rand. The rand has been propped up by the billions of foreign currency flowing into our bond market. Any return of this money back to home base, which could happen if global interest rates normalise, could be disastrous for the rand. Then the current strong gale would turn into a force-10 hurricane.

Smart investors can turn such a scenario into their advantage and profit by buying rand-hedge investments or taking some money abroad. There are a number of excellent offshore funds and exchange traded funds on the local market.

As Ian Liddle, chief executive of Allan Gray said on this website two weeks ago: invest at least 25% of your pension offshore. I think this number should be higher.