Vanishing Inflation Expectations Fuel South African Bond Rally
Break-even rates, a gauge of bond investors' expectations of average inflation, are projecting price increases will stay within the central bank's 3% to 6% target range for the next two decades. The 20-year measure fell this week to 5.77%, the lowest on record, except for a brief Covid-induced plunge.
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Yahoo
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- Yahoo
1 top growth stock up 233% to consider buying in July
Wise (LSE: WISE) is a high-quality UK growth stock that listed in 2021. Unfortunately, its debut coincided with the end of the near-zero interest rate era — a shift that sent richly priced growth shares tumbling. Wise lost more than 60% of its value in 12 months! However, since bottoming out at 311p in July 2022, the stock has surged 233% higher. And it hit a record recently, as more investors turn bullish on the fintech disruptor. Could Wise stock head even higher over the next few years? I believe it can. Here's why. Wise specialises in international money transfers, believing that this should work without borders. In other words, money transfers should work the same internationally as easily as they do domestically. In reality though, there's still a lot of hassle when people and businesses move money across borders. SWIFT payments, for example, typically take a few working days to clear. Fees can be high and opaque. Wise's infrastructure and products aim to improve this clunky process with faster times and lower prices. Approximately 65% of transactions being done by Wise are now completed in under 20 seconds. In the 12 months to 31 March, underlying income jumped 16% to £1.4bn, driven by customer growth, account adoption, and higher interest rates. Active customers grew 21% to 15.6m, more than doubling since 2021. There are a number of things I find attractive about Wise. Firstly, it's going after a massive opportunity. Each year, individuals move around £3trn across borders, and Wise currently handles about 5% of that. Then there are small businesses, where cross-border transfers total roughly £14trn annually. Wise's share here is even smaller, but growing. Add in the enterprise and corporate segments, and the full opportunity balloons to around £32trn a year (yes, trillions!). Now, most of this is not directly within Wise's app ecosystem yet. But the company is building the infrastructure to theoretically move it all. It transferred around £145bn in its last financial year, but aims to one day move trillions and become 'the network for the worldʼs money'. To this end, the firm is linking more deeply into the payment systems of Brazil and Japan, while already handling around 12% of all global remittances to the Philippines. So its scale is only increasing. Another thing I like here is that Wise is run by co-founder Kristo Käärmann. In my experience, the best growth stocks are often run by founders that sacrifice short-term profitability for long-term market share (think Jeff Bezos at Amazon). In Wise's case, the company is obsessed with lowering fees for customers as it scales. It recently dropped its cross-border take rate to 0.53%, from 0.67% the year before. And Wise intends to lower it further in future. As Käärmann explains: 'This strategy of continuously lowering our fees makes it harder for anyone to compete, and it will underwrite the long-term success and growth.' In the near term, there are risks relating to a global economic downturn. That could dampen transaction volumes, meaning fewer people and businesses send money abroad. However, over the long term, I think this stock has all the ingredients to be a big winner. It's currently trading at a reasonable valuation, making it well worth considering. The post 1 top growth stock up 233% to consider buying in July appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Wise Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Bloomberg
an hour ago
- Bloomberg
South African Agriculture Braces for Trump Tariffs
US President Donald Trump's de-escalation on tariffs offered a temporary reprieve to African businesses, some which initially considered abandoning the US market. In South Africa, the world's second biggest citrus exporter, uncertainty remains over whether Trump will ultimately impose a 30% levy or stick to his baseline 10%. Bloomberg's Jennifer Zabasajja visited a producer ramping up shipments before Trump's 90-day postponement of his higher rates expires. (Source: Bloomberg)
Yahoo
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- Yahoo
Europe Is Playing Catch-Up in the Race for Critical Minerals
A once-niche corner of the commodities market has become a new frontier in global power politics. To make everything from electric vehicles and wind turbines to next-generation weapons systems, modern economies now depend on a growing roster of buried ingredients: cobalt, lithium, rare earths and other so-called critical minerals. Governments are responding in kind. In April, the U.S. signed a landmark deal with Ukraine, granting U.S. firms access to the country's mineral reserves in exchange for defense and reconstruction support. It was a transactional agreement and a revealing one: A war-forged security partnership now hinges on minerals as bargaining chips, in a world where raw materials increasingly double as strategic currency. Elsewhere, Gulf states are making inroads across Africa, while China—already the commanding force in global mineral supply chains—continues to tighten its grip. Now the European Union is sprinting to catch up. Over the past two years, Brussels has signed a flurry of raw materials partnerships, including with Zambia, the Democratic Republic of Congo and Namibia. Robert Besseling, CEO and founder of Pangea-Risk, notes that the EU 'has its own definition of what makes some minerals critical, and that's different from how China, the U.S. and smaller players like Russia see what is critical for their domestic economies.' As a major steel producer, for instance, the EU's list of critical minerals includes coking coal, along with materials like silicon, helium, boron and gallium, which aren't priorities for most other powers. To get more in-depth news and expert analysis on global affairs from WPR, sign up for our free Daily Review newsletter. But where demand for minerals overlap, the competition is fierce. And whether it's aluminum and bauxite in Guinea, graphite in Mozambique, lithium in Zimbabwe, nickel in South Africa, and copper and cobalt in the DRC and Zambia, Besseling says, the central arena of that competition is in Africa. Meanwhile, in the name of 'de-risking,' the EU also wants to wean itself off foreign dependence by building what it calls more resilient supply chains, which is shorthand for reducing reliance on a single supplier, more local or allied-country processing and greater control over each stage of production. That won't be easy, however. Take lithium and rare earths, for instance: The EU imports nearly all of its supplies of both—and in the case of rare earths, half come directly from China, which controls 90 percent of global processing. 'China is way ahead in terms of investment, but also in terms of actual ownership and operations of mines,' says Besseling. That reach, he adds, spans the entire production process. When it comes to electric vehicles, or EVs, for example, Chinese companies dominate the supply chain for the minerals that go into their batteries on the mining side. But they also dominate 'the processing side and the manufacturing of EVs,' he adds. 'The whole value chain is essentially dominated by China.' It wasn't always this lopsided. During the 2003-2011 commodity supercycle, when metal prices surged, Western mining giants such as BHP, Rio Tinto and Glencore aggressively expanded into Africa and Latin America, pouring billions into what are known as frontier projects in the sector due to their greater risk. But as copper and cobalt prices fell, the calculus for risky overseas ventures shifted. Investors demanded caution, and companies began retreating. At the same time, the wealthy member countries of the Organization for Economic Cooperation and Development doubled down on the so-called Gentlemen's Agreement, a long-standing pact discouraging the use of subsidies to boost national champions. The idea was to hedge against a race to the bottom in state-backed financing, meaning no cheap loans to help mining firms compete abroad. The problem is that Chinese lenders have opted for a different approach that isn't based on the West's liberal market-based model, says Brooke Escobar, who directs a team at AidData specializing in financial tracking. In a report released in January, Escobar and her co-authors detailed how, over the past two decades, China has built a financing model that's fast, scalable and tough for Western countries to match. A Chinese state-owned enterprise might enter a country to co-develop a copper or cobalt mine, for instance, backed by a loan from one of Beijing's policy banks or state-owned commercial lenders. 'But it's concessional lending,' Escobar points out, 'so it's cheaper than what those companies could get on the market otherwise.' Moreover, that financing often covers the costs of developing not just the mine itself, but also roads, power plants and export terminals. And it usually comes in stages, with several loans supporting the project through development and operation. Meanwhile, in addition to securing equity in the mine, the Chinese firm signs a long-term offtake agreement—a contract to buy a set share of the mine's output—typically with a buyer in mainland China. This combination of ownership abroad and guaranteed supply for domestic processors is central to China's strategy. And it has paid off. Between 2000 and 2021, China committed nearly $57 billion in state-backed financing for these mineral projects across 19 low- and middle-income countries, according to AidData's report. As a result, it now holds sway over every stage of the supply chain for many of the critical minerals that will fuel the green energy transition. Chinese companies control 25 percent of global lithium mining capacity and 80 percent of cobalt production in the DRC, which supplies over half the world's cobalt. China also handles around 90 percent of global rare earths processing, over two-thirds of cobalt and lithium refining, and more than half of the global material exports that go into batteries. In short, China has developed a playbook that sidesteps market hesitations, tolerates political risk and prioritizes long-term strategic gains. And the West has struggled to adapt. 'It's not necessarily that the Chinese companies have this exclusive edge,' says Tiffany Wognaih, an Africa-focused political risk and strategy adviser at the J.S. Held global consulting firm. 'Rather, they have been the players that have shown a willingness to enter the market.' They've also shown greater staying power compared to Western companies that did enter frontier markets. Wognaih points to the U.S. mining giant Freeport-McMoRan, which began investing heavily in the mid-2000s in two major copper and cobalt sites in Congo: the Tenke Fungurume mine and the Kisanfu exploration project. But in 2016, under financial strain, 'they put the asset up for sale,' Wognaih says. 'And China took it.' Escobar also cites Freeport-McMoRan's exit from Congo, but as a case of Western governments failing to act. Both U.S. officials and representatives of the company appealed for help from Washington to retain control of the project. 'But no one stepped in,' she says, in part due to a lack of political will. But she adds that, having built their finance systems around strict rules on market neutrality, OECD countries 'don't have the mechanism to say, 'We're going to extend you this cheap finance that will provide you the liquidity that you need to make it through.'' Without that state backing, Western financiers are left to rely on risk-reward calculations, and that limits the options. 'Tier-one projects will get financed,' Andor Lips, a financing and raw materials expert at the Dutch Geological Survey, says, referring to quality projects that are ready to come to market. But there are only a handful of them, and lower-tier projects are riskier, starting with the risk of exploring a concession and not finding exploitable reserves. 'There are also market risks, price, environment, delays,' he adds. 'It's all in the mix.' That's bad news for the EU. For now, the mineral partnerships it has signed are largely symbolic: nonbinding and dependent on private investment. But as Lips—who has contributed to work by the European Commission as an external expert—notes, 'the EU is not a country, so the legal push to encourage investments is limited: You cannot provide tax incentives, you cannot provide additional capital, where normally a country can do that.' There are EU financial tools at private firms' disposal, including the European Investment Bank, the European Bank for Reconstruction and Development, and initiatives like the Global Gateway. But navigating them is complex. Figuring out which funds can be used where, and how overlapping mandates interact, is 'a bit of an intellectual exercise,' Lips says, adding that even functionaries within the European Commission are often operating based on fragmented information. Worse, the EU is up against the clock, as the race for critical minerals is getting more crowded. Gulf countries are deploying cash and state backing to strike minerals deals across Africa, with Turkey, India and others following suit. Many are copying China's playbook: bundled deals, state-backed financing and minimal red tape. The U.S., under President Donald Trump, has loosened enforcement of anti-corruption rules to give companies more leeway in risky environments and is partnering with Gulf allies to share investment risk. The EU, by contrast, remains bound by high environmental, social and governance, or ESG, standards, as well as a fractured bureaucracy and few tools to compete. Indeed, Europe's lag is partly structural: Market-first models simply aren't built to compete with the speed and coordination of state-led rivals like China. But it's difficult to reflect on the past few decades without also recognizing a stunning lapse in political foresight. As China doubled down on access to critical minerals, Western countries pulled back, even as it was already clear these minerals would come to hold tremendous geopolitical weight. Now, catching up may mean setting aside market orthodoxy in favor of security priorities. The urgency is real: After Beijing imposed new export controls on rare earths this spring, automakers in Europe and the U.S. warned they were just weeks away from halting production lines. But even if Europe secures more raw materials, full independence from China remains out of reach. 'If you get access to processed minerals you still need to create demand for those processed minerals in the EU,' says Poorva Karkare, senior policy analyst at the European Centre for Development Policy Management. 'In order to do that, you need to start producing more batteries, more EVs, more whatever.' And given its dominance across the supply chains for these products, that will mean working with China. Rather than framing the challenge as a zero-sum game, Karkare suggests the EU should bring China into its partnership model. European firms may currently play a small role in extraction, but they excel in surveying and engineering. Even their ESG standards could work to their advantage, as Chinese firms are already turning to European counterparts to meet rising standards demanded by investors, global regulators, African governments and consumers, she notes. If European firms embed themselves deeper into project lifecycles, they could claim more of the value chain and start to build mutual dependence with their Chinese partners. Karkare concedes that EU leaders might balk at a strategy that involves China. 'But China is going to be involved every step of the way, and there's almost no circumventing that,' she says. The conversation in Brussels and Washington these days has shifted to completely decoupling from China. But as Karkare notes, when it comes to critical minerals, that's no longer feasible. Instead, Europe should try to think of ways to reduce that dependence, including by making it mutual. Carl-Johan Karlsson is a freelance journalist covering politics in the U.S. and Europe. You can find him on LinkedIn. The post Europe Is Playing Catch-Up in the Race for Critical Minerals appeared first on World Politics Review.
