When it rains, it pours...

One of South Africa's largest domestic manufacturing industries, the automotive industry, continues to experience setbacks despite its already existing challenges. AGOA had previously ensured a duty-free importation of South African made goods into the US, which now seems unlikely to be renewed. Currently, the industry faces a 25% tariff on foreign vehicles and components imported by the US market, a 10% tariff on any imports by the US market and the postponed 30% tariff announced in the previous weeks by Trump. Prior to these tariffs, the US market was identified as one of the fastest growing automotive export markets for South Africa, with a 22% year-on-year growth rate being recorded in the previous fiscal year. It goes without saying that the tariffs imposed on the industry will most likely have a butterfly effect-type of nature, with the impact estimated to affect factories, communities in which the manufacturing takes place, the value chain linked to the factories, employment, etc. Amidst all of this, the industry is also facing a 10% wage increase demand plus add-ons from workers and their unions whilst, it employs over 100 000 people.

Economists have indicated that it is likely that South Africa might get expelled from AGOA, and this will most likely take the situation from bad to worse as industry uncertainties would increase rapidly. The country heavily depends on AGOA to gain access into the US market. Despite the South African produced vehicles accounting for 0.1% of vehicle sales made in the US in the previous fiscal, this has helped South African manufacturers immensely as the duty free exports to the US benefit has led to the industry's exports accounting for 47% of the all the exports made through AGOA. ASPEN takes a hit...

Aspen's shares decreased by 30% after it announced that its earnings might decline significantly due to a contractual dispute. The pharmaceutical giant has notified shareholders that the financial ruin could range somewhere around R2 billion in EBIDTA and R770 million in impairment. The dispute reportedly relates to the manufacturing and technology agreement with a contract manufacturing customer for mRNA products. The company has noted that the industry has been and will continue to be affected by the current and turbulent and unpredictable world trading environment. It went even further to say that businesses that sell products within the USA are likely to source those products from manufacturing sites within the USA. Consequently, this economic landscape presents risks and opportunities for Aspen's contract manufacturing business. Lastly, Aspen has reported that it has valuable and needed manufacturing capacities and skills to assist in filling in the voids evident in the changing global pharma landscape.

That is all for this week! Thank you for reading. Please note that from this week onwards, Gold reports will be happening on Saturdays after the market has close. This will help with better understanding and also make our forecasts more accurate. Please like, comment, subscribe and share with as many people as possible.