RequisiteRequium
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I think it is about time we discuss Jurisdictional risk, and how financial markets can bleed into survival risk. Jurisdictional risk is defined as risk that arises when operating in a foreign jurisdiction. This risk can come by simply doing business or by lending money in another country (Understanding Jurisdiction Risk). I would use Sovereign risk, but Jurisdictional risk is more important to point out since this issue is not systemic to the broader african market or any trading partners for south africa. Now, there is a ton of history to cover for the background of south africa, but i will give you a quick tldr & some links to check the flow. Since the fall of Apartheid and the view of reparations in south africa (which is similar to the impact in Zimbabwe), you had a rising sentiment of communism, race tension and haves/have not in south africa. This has lead to many conflicts where you have white farmers who built up their wealth and the africans who lived on the land for generations who believe that they should nationalize that land (see Zimbabwe for what actually happened with that issue). This leads to racial tensions between each other, and has gotten worse where there was a rise of attacks on those white farmers to where they see it as a white genocide while the President of south africa denying it with the former president Donald trump saying it is. This fire keg of tensions finally hit when unemployment hit 32.6% with 43.2% of the labor force without work for 3 months, and the arrest of Jacob Zuma & the majority populous of Zuma tribe reside turn into riots claiming it is a political/ethnic crackdown (African politics is mostly based on tribes for representation. Please refer to the Rowanda genocide where this tribal crackdown really hits.). This is now creating the speculation that this has transformed for the last 2-3 days into a racial riot where they want white people & non africans to suffer like the rest of the 43% of the population for the last year under covid (This last statement is based on eyes on the ground south africans & their voice recordings through whats app & telegram).
Now, this is an ever updating situation, and most do not consider South africa as important. However, anyone who deals with shipping companies in trade, and/or deal with investing in african companies knows how vital South Africa is to the health of Africa. South Africa deals with 86.51% of all Southern african trade(1), Africa’s ports account for 4% of global containerized trade volume, much of which comprises imports of manufactured goods (2), Port of Richards Bay reached the milestone in handling over 100 million tons of cargo during 2017/18, and Cape Town is South Africa’s second biggest seaport and its strategic location ideally positions it as a hub terminal for cargo to South America and the Far East (3), and South africa is a member of the AFCFTA which makes it more interconnected with it's neighboring countries & is pivotal to gold, coal, iron, and car production (4). This makes the situation have massive impact onto the already tightened supply lines, and if we were to see another Evergiven. Then we can expect inflation to skyrocket.
Now, any view of history knows about unemployment and governmental policy in the third world will know how this is very similar to the Arab Springs incident but in an african fashion. If this is the case, then the burning of electronic stores, looting of food/food spoilage, shipping containers, chemical plant, water treatment, and burning fields of crops then (5) (6) (7) (8) (9) (10) (11) (12) (13) all makes sense. Now, if you were to look at it from a different perspective then the LA riots from the Korean American perspective will help be a reference guide to how the local level response has been since most in south africa know that the police have not been helping in the early onset, cops letting people go, and one cop actually loot himself (14) (15) (16).
The real question we must ask ourselves as investors will be as followed.
1. Will the risk be systemic to all of africa?
1a. If it is not, then how long will it take to quell, and rebuild supplies to get the Navel & land route working for travel/export
1b. If it is, how is this going to hurt other African nations who rely upon South Africa for exports, and will they suffer stress like the Arab Springs?
2. How will supply chains deal with South Africa not being able to fully bounce back from this issue?
3. How is your nation dealing with the fault lines that have existed pre-covid, and is it being solved or metastasizing into a bigger issue waiting for a match?
4. Is your portfolio prepared to take advantage of the market not realizing this could be a bigger deal?
Now, I am linking the FX market for USD/ZAR, and you can tell this is a big deal when a $1 swing is 10000 pip's, and the FX markets are gaged on a position of a trade based upon how much of a currency lot you have per pip. (17) There is opportunity everywhere, but it is all about if you can see it & if you are willing to take it. I know this will be an ever-changing story, but I am looking at this situation with a hawk's eye. Especially with this tweet from the EEF (18).
Links to general view:
www.bbc.com
www.bbc.com
www.reuters.com
www.nytimes.com
pulitzercenter.org
View: https://www.youtube.com/watch?v=Jgb3sn4-bhw
www.aljazeera.com
www.abc.net.au
www.nytimes.com
www.bbc.com
UPDATE 1-South Africa's unemployment rate reaches new record high in first quarter
vocaroo.com
voca.ro
View: https://twitter.com/FaeceSocietatis/status/1415125265202745349
Sources for numbered references:
(1)International Trade: The Position of Africa in Global Merchandise Trade
(2)Maritime trade and Africa | UNCTAD
(3)https://www.trade.gov/knowledge-product/south-africa-port-and-logistics
(4)South african foreign trade in figures - Santandertrade.com
(5) View: https://twitter.com/FaeceSocietatis/status/1415037355006824449
(6) View: https://twitter.com/FaeceSocietatis/status/1415009038249693185
(7) View: https://twitter.com/FaeceSocietatis/status/1414706432344219652
(8)KZN farmers dump milk as violence disrupts supply chains
(9)https://twitter.com/FaeceSocietatis/status/1414970923589963785
(10)https://twitter.com/Sotiridi1/status/1414978343158665223
(11)https://twitter.com/Newzroom405/status/1414899593041547265
(12)https://twitter.com/Newzroom405/status/1414917158518366210
(13)https://twitter.com/FaeceSocietatis/status/1414705619261665286
(14)K-Town '92: Reporters - L.A. Riots Documentary
(15)https://twitter.com/FaeceSocietatis/status/1414920973745278981
(16)https://twitter.com/FaeceSocietatis/status/1415009839378542596
(17) Live stock, index, futures, Forex and Bitcoin charts on TradingView
(18)https://twitter.com/EFFSouthAfrica/status/1414695743873503235
Now, this is an ever updating situation, and most do not consider South africa as important. However, anyone who deals with shipping companies in trade, and/or deal with investing in african companies knows how vital South Africa is to the health of Africa. South Africa deals with 86.51% of all Southern african trade(1), Africa’s ports account for 4% of global containerized trade volume, much of which comprises imports of manufactured goods (2), Port of Richards Bay reached the milestone in handling over 100 million tons of cargo during 2017/18, and Cape Town is South Africa’s second biggest seaport and its strategic location ideally positions it as a hub terminal for cargo to South America and the Far East (3), and South africa is a member of the AFCFTA which makes it more interconnected with it's neighboring countries & is pivotal to gold, coal, iron, and car production (4). This makes the situation have massive impact onto the already tightened supply lines, and if we were to see another Evergiven. Then we can expect inflation to skyrocket.
Now, any view of history knows about unemployment and governmental policy in the third world will know how this is very similar to the Arab Springs incident but in an african fashion. If this is the case, then the burning of electronic stores, looting of food/food spoilage, shipping containers, chemical plant, water treatment, and burning fields of crops then (5) (6) (7) (8) (9) (10) (11) (12) (13) all makes sense. Now, if you were to look at it from a different perspective then the LA riots from the Korean American perspective will help be a reference guide to how the local level response has been since most in south africa know that the police have not been helping in the early onset, cops letting people go, and one cop actually loot himself (14) (15) (16).
The real question we must ask ourselves as investors will be as followed.
1. Will the risk be systemic to all of africa?
1a. If it is not, then how long will it take to quell, and rebuild supplies to get the Navel & land route working for travel/export
1b. If it is, how is this going to hurt other African nations who rely upon South Africa for exports, and will they suffer stress like the Arab Springs?
2. How will supply chains deal with South Africa not being able to fully bounce back from this issue?
3. How is your nation dealing with the fault lines that have existed pre-covid, and is it being solved or metastasizing into a bigger issue waiting for a match?
4. Is your portfolio prepared to take advantage of the market not realizing this could be a bigger deal?
Now, I am linking the FX market for USD/ZAR, and you can tell this is a big deal when a $1 swing is 10000 pip's, and the FX markets are gaged on a position of a trade based upon how much of a currency lot you have per pip. (17) There is opportunity everywhere, but it is all about if you can see it & if you are willing to take it. I know this will be an ever-changing story, but I am looking at this situation with a hawk's eye. Especially with this tweet from the EEF (18).
Links to general view:
South Africa's 'toxic' race relations
Racism remains deeply embedded in South Africa nearly 25 years after minority rule ended, writes Fergal Keane.
www.bbc.com
Race in South Africa: 'We haven't learnt we are human beings first'
A teacher was charged with fraud for describing himself as "African".
www.bbc.com
South African white farmers, Black protesters face off over farm murder
White South African farmers and Black protesters hurled abuse and threats at each other on Friday during a court hearing in a murder case that has exposed still simmering racial tensions 26 years after the end of apartheid.
Killing of White Farmer Becomes a Flash Point in South Africa (Published 2020)
Outside a court hearing for two Black suspects in a murder case, white Afrikaners nostalgic for the apartheid era and Black protesters angry that whites still own most farmland squared off.
The Myth of White Genocide
The squatter camp outside Lawley township, in the southwest of Johannesburg, stretches for miles against a bare hillside, without electricity, water, or toilets. I visited on a blustery morning in...
South Africa president says farm attacks not ‘racially motivated’
President Ramaphosa rejects claims by pressure groups that a spike in attacks on white farms is ‘ethnic cleansing’.
Trump's tweet on land seizures, 'killing of farmers' angers South Africa
US President Donald Trump says he has called for his Secretary of State to study of South African "land and farm seizures" and "killing of farmers", prompting the country to accuse Mr Trump of stoking racial divisions.
www.abc.net.au
Jacob Zuma, Former South African President, Is Arrested (Published 2021)
The Constitutional Court had found him guilty of contempt for failing to appear before a commission investigating corruption accusations that tainted a president once best known for fighting apartheid.
South Africa deploys military to tackle Zuma riots
President Cyril Ramaphosa says such deadly unrest was "rarely seen in the history of our democracy".
www.bbc.com
Vocaroo | Online voice recorder
Vocaroo is a quick and easy way to share voice messages over the interwebs.
vocaroo.com
Vocaroo | Online voice recorder
Vocaroo is a quick and easy way to share voice messages over the interwebs.
voca.ro
Sources for numbered references:
(1)International Trade: The Position of Africa in Global Merchandise Trade
(2)Maritime trade and Africa | UNCTAD
(3)https://www.trade.gov/knowledge-product/south-africa-port-and-logistics
(4)South african foreign trade in figures - Santandertrade.com
(5) View: https://twitter.com/FaeceSocietatis/status/1415037355006824449
(6) View: https://twitter.com/FaeceSocietatis/status/1415009038249693185
(7) View: https://twitter.com/FaeceSocietatis/status/1414706432344219652
(8)KZN farmers dump milk as violence disrupts supply chains
(9)https://twitter.com/FaeceSocietatis/status/1414970923589963785
(10)https://twitter.com/Sotiridi1/status/1414978343158665223
(11)https://twitter.com/Newzroom405/status/1414899593041547265
(12)https://twitter.com/Newzroom405/status/1414917158518366210
(13)https://twitter.com/FaeceSocietatis/status/1414705619261665286
(14)K-Town '92: Reporters - L.A. Riots Documentary
(15)https://twitter.com/FaeceSocietatis/status/1414920973745278981
(16)https://twitter.com/FaeceSocietatis/status/1415009839378542596
(17) Live stock, index, futures, Forex and Bitcoin charts on TradingView
(18)https://twitter.com/EFFSouthAfrica/status/1414695743873503235
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