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What happens if Moody's downgrades South Africa to JUNK?!

by , 13 November 2019
What happens if Moody's downgrades South Africa to JUNK?!
Q. “Hi Timon, I read the weekly article where you expect the JSE ALSI40 to rally.

My question is, if Moody's does eventually decide to downgrade South Africa to junk what would happen and when is the next grading?”

A. The next possible downgrading for South Africa would happen as soon as March, if South Africa fails to come up with a plan with “Credible debt-stabilisation”.
 
To avoid a downgrade, the government and the unions will need to involve some tough negotiations about reining in spending.
 
If Moody’s did downgrade us to junk, a number of things would happen:
 
First, the rand (USD/ZAR) bonds will be excluded from the FTSE World Government Bond Index (WGBI) which comprises 14 currencies including the US dollar and Yen.
 
This would be a major issue as according to the National Treasury data, foreign investors own 37% or about R780 billion of South Africa’s currency bonds.
 
This means, overseas investors will be forced to sell over R200bn in SA government bonds, as many funds will not allow investors to invest in “junk” bonds.
 
Second, SA Bonds will be kicked out of Citigroup’s World Government Bond Index, as they also do not allow “junk” bonds in their investment list.
 
What this means for South Africans is that with Moody’s downgrading us to junk, it will be bad news for the rand.
 
A weaker rand will lead to a number of issues including: 
 
Higher fuel prices (SA Imports most of its oil in US dollars).
Higher prices for imported electronics and machinery.
Higher prices for maize and wheat (as prices are linked to the US dollar).
 
________________________________________
 
How I became a professional Forex trader - and how you can do exactly the same
 
My name’s Timon Rossolimos and I am a professional trader.
 
I run a small trading newsletter in the heart of Gauteng, Johannesburg, and have been doing so for the past three and a half years.
 
Before that I managed a restaurant, traded for myself and worked at a few broker houses.
 
It’s there I first became interested in trading - but with normal trading in shares, not realising just how profitable trading the currency markets could be.
 
I was trying to find a genuine way to profit from Forex trading among all the misinformation and downright lies bandied about on the web.
 
 
________________________________________
 
What a loyal MATI Trader System Programme Member
has to share:
 
“The programme is absolutely straight forward, easy to understand and
I have been able to apply the strategies within one day of going through the entire handbook alone. Thank you for taking so much time and effort for creating this trading masterpiece Timon”
 
Martina Vis
KZN
 
REPLY: My pleasure. This programme encapsulates everything I know as a trader. I feel that I can now live in peace knowing my MATI Trader System Programme is available to the public to share and profit as I have done.
 
________________________________________
 
There's takeover opportunities everywhere!
 
If you’d bought stock just before these companies were taken over... I'm talking about Absa, SA breweries, and more recently Clover and Pioneer Foods they 'would likely [ have been] some of the best investments, you could have made says analyst Francois Joubert.
 
Now, a similar opportunity is building. But this unfolding story is a lot BIGGER
 
________________________________________
 
Q. “I’m looking to start trading using CFDs rather than shares. Could you explain the difference between if I wanted to buy 20 shares of Aspen versus 20 CFDs of Aspen?”
 
A. In short, trading CFDs is a much cheaper and a more profitable method to grow your portfolio rather than investing in shares.
 
When you buy a CFD you’ll pay a fraction of the price (known as the margin deposit) of the share and you’ll still be exposed to the full value of the share.
 
To explain this better, let’s use an example with both shares and CFDs.
 
EXAMPLE: Buying 20 Aspen shares
 
Let’s say Aspen is trading at R115.00 per share. If you want to buy and own 20 shares you’ll have to pay R2,500 (R115 X 20 shares).
 
When you invest in shares, the maximum amount you can lose is the R2,500 should the share go to zero.
 
When you actually buy the shares, you’ll have a number of benefits including: Being able to attend AGMs, vote and receive physical dividends.
 
Now let’s see how this differs when you buy 20 Aspen CFDs
 
EXAMPLE: Buying 20 Aspen CFDs
 
Just to refresh your memory.
 
A CFD (Contract for Difference) is a contract between the buyer and the seller to pay the difference in price between where it is bought and sold for.
 
Basically, you’ll just be exposed to the share price and the price movements, without actually owning the shares.
 
And so, if Aspen is trading at R115 per share, you’ll need to see what Aspen’s CFD will cost. This is known as the margin per share. If the margin is 10% this means, you’ll only pay R1.15 and you’ll still be exposed to the full value of the share.
 
If you bought 20 Aspen CFDs you’ll therefore only have to pay R230 (R115 per share X 10% margin per CFD X 20 CFDs).
 
When you buy 20 Aspen CFDs you’ll be exposed to the full value of R2,500 This means, if the share goes to zero, even though you risked only R230 you’ll could lose R2,300 should the share go to zero…
 
The beauty about trading CFDs, means you’ll be exposed to more by paying less… And this is how us traders are able to gear up their profits and losses compared to when trading shares.
 
However, if you know how to manage your risk when trading CFDs, you’ll know how to maximise your profits and minimize your losses…
 
If you’re ready to take your trading to the next level, you’ll need to understand how CFD trading works to a T. Continue reading by clicking here to accelerate your trading performance.
 
Trade well,
Timon Rossolimos,
Founder, MATI Trader System


What happens if Moody's downgrades South Africa to JUNK?!
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