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RUCPCIM/CIMS NTDB WASHDC
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UNCLAS SECTION 01 OF 02 PRETORIA 000057 
 
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DEPT FOR AF/S/MTABLER-STONE; AF/EPS; EB/IFD/OMA 
USDOC FOR 4510/ITA/MAC/AME/OA/DIEMOND 
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USTR FOR COLEMAN 
 
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TAGS: ECON EFIN EINV ETRD EMIN EPET ENRG BEXP KTDB SENV
PGOV, SF 
SUBJECT: SOUTH AFRICA ECONOMIC NEWS WEEKLY NEWSLETTER JANUARY 05, 
2007 ISSUE 
 
 
PRETORIA 00000057  001.2 OF 002 
 
 
¶1. 1. (U) Summary.  This is Volume 7, issue 01 of U.S. Embassy 
Pretoria's South Africa Economic News weekly newsletter. 
 
Topics of this week's newsletter are: 
- New Trading Year Opens with JSE Record High 
- SA Ties Up Missile Deal with Brazil 
- Oprah Opens School for Poor Pupils 
- Portfolio Investment in SA at Record Level 
- Mining BEE Deals Slow Down 
End Summary. 
New Trading Year Opens with JSE Record High 
------------------------------------------- 
 
¶2. (U) The Johannesburg Securities Exchange (JSE) continued its 
bullish trend, with the all-shares index closing at a record high of 
25,156.71 on the first trading day of 2007.  The JSE is well above 
the 24,000 level of just one month ago.  Experts cite firming 
commodity prices on the back of a weaker dollar, as well as investor 
confidence in emerging markets, as the reasons for the recent upward 
jump in the share index.  However, the all share index ended 2.21% 
lower on Wednesday as profit-takers took money off the table. 
(Business Day Jan. 3, 2007) 
 
SA Ties Up Missile Deal with Brazil 
----------------------------------- 
¶3. (U) A government-to-government agreement between SA and Brazil 
has been signed for a joint venture between Armscor, Denel and the 
Brazilian Air Force for the development of missiles.  Brazil will 
commit $52 million to the project, which will be led by Denel in 
collaboration with its Brazilian counterparts.  Denel will develop 
its A-Darter short-range air-to-air missile from a prototype to an 
operational system.  According to a Denel spokesperson, the 
agreement intensifies missile co-operation with the Brazilians, who 
opted for Denel as its partner because of Denel's proven capability 
in the missile field.  Denel hopes that other projects would flow 
from the missile agreement. (Business Day, Jan. 3, 2007) 
Oprah Opens School for Poor Pupils 
---------------------------------- 
 
¶4. (U) Oprah Winfrey opened the Oprah Winfrey Leadership Academy for 
Girls near Meyerton, south of Johannesburg, on January 2.  Winfrey's 
school is the culmination of a pledge she made to Nelson Mandela six 
years ago.  Winfrey has spent more than $40 million on the project, 
which this year will house 152 girls from families whose income is 
less than R5, 000 ($720) a month.  The star said that she wanted to 
provide each girl with an environment where they were "consistently 
inspired" and could overcome the legacy of their disadvantaged 
births.  Winfrey has been involved in every detail of the school, 
from choosing the color of the bricks to making sure that the 
dormitory light switches can be reached from the girls' beds. 
Winfrey brought Joan Countryman, who ran the Lincoln Rhode Island 
College in the U.S., out of retirement to run the school for a year. 
 All the other teachers are South African and the school will follow 
a curriculum closely aligned to the South African curriculum. 
(Business Day, Jan. 3, 2007) 
 
Portfolio Investment in SA at Record Level 
------------------------------------------ 
 
¶5. (U) Foreign investment in South African stocks was at record 
levels for a second year in a row.  According to the JSE, foreign 
ownership rose 47% totaling R73.7 billion ($10.5 billion) in 2006. 
In total, foreigners purchased R480.8 billion ($68.7 billion) and 
sold R407.1 billion ($58.2 billion) of South African shares.  Heavy 
government spending in preparation of the 2010 World Cup will likely 
spur further foreign interest in South Africa.  The U.S. is the 
largest portfolio investor in South Africa, accounting for $34.5 
billion or 42% of the portfolio investment as of December 2005.  The 
U.S. is the second largest foreign direct investor in South Africa 
after the United Kingdom.  As of December 2005, the value of U.S. 
FDI in South Africa is $5.1 billion, accounting for nearly 7% of 
total FDI.  (Business Day, Jan. 4, 2007, SARB Quarterly Bulletin) 
 
Mining BEE Deals Slow Down 
-------------------------- 
¶6. (U) The pace of black economic empowerment (BEE) deals in the 
mining sector slowed in 2006, with a value of less than R10 billion 
($1.4 billion) compared with about R20 billion ($2.8 billion) in 
2005, when the biggest companies concluded empowerment transactions. 
 
PRETORIA 00000057  002.2 OF 002 
 
 
 According to research group Empowerdex's mid-year progress report 
on BEE among JSE-listed companies, the resources sector has 
concluded a total of R51.5 billion ($7.4 billion) of empowerment 
ownership deals to date, and only about one-third of resources 
companies have not concluded any empowerment deals at all.  A few of 
the major companies are believed to have more empowerment deals in 
the pipeline, which are likely to be announced this year.  These 
include Anglo Coal, BHP Billiton's Ingwe Coal, Samancor Manganese 
and Anglo Platinum.  Mining companies committed themselves in the 
2002 mining charter to bring in 15% black equity by 2009 and 26% by 
¶2014.  Compliance with the charter was incorporated in the Mineral 
and Petroleum Resources Development Act, introduced in 2004, which 
revised the way in which mining rights were granted.  The necessity 
of complying with legislation gave companies a strong incentive to 
seek black partners and most of the activity took place in 2004 and 
¶2005.  (Business ay, Jan. 4, 2007) 
 
BOST