Commodity Full Year Price Chart Commodity Developments

Top Ten Gold Mining Countries (t)

2015 was a disastrous year for commodities as an asset class. All mineral commodities were in red when it comes to price returns, as a result of the

reverse of quantitative easing by the Fed, strengthening USD, lacklustre

economic activity in China and flagging emerging economies.

Many miners were forced either to shed off excess capacity, close high cost mines or postpone capital investment activities as a result of weaker prices.

However, in SA, despite the ZAR weakening by 35% in 2015, gold miners TCC only fell by 0.5% as cost inflation from factors including power and labour as

well as higher unit costs on lower output from some operations came close to outweighing some benefits gleaned from weakening ZAR.

In 2016, gold price will be weighed down by a higher US dollar, improvement in

investor sentiment and higher US yields.

Global Refined Production (000t)

The Volkswagen (VW), emissions-cheating scandal and falling gold prices had a huge negative impact on platinum and palladium prices in 2015.

Global production has been trending up owing to normalisation of production in major producer SA after the crippling 5-month strike and increased production

capacity in Zimbabwe.

In case of platinum and palladium, there should be limited downside price

pressures from the current levels. Speculative investors may have closed a substantial amount of net-long positions in platinum and palladium.

1,000

1,050

1,100

1,150

1,200

1,250

1,300

Gold Prices US$/oz

Q1:15

Q2:15

Q3:15Q4:15

YoY: ↓11.9% 0

100

200

300

400

500

2014

2015e

820

920

1,020

1,120

1,220

1,320

Platinum Prices US$/oz

Q1:15

Q2:15

Q3:15

Q4:15

YoY: ↓27.7% 0

200

400

600

800

1,000

1,200

1,400

1,600

Q3:14 Q4:14 Q1:15 Q2:15 Q3:15

SA Zimbabwe

North America Russia

Other

2

Commodity Full Year Price Chart Commodity Developments

Global Surplus (million t)

Surging output in top producer China, together with high Chinese exports of

semi-fabricated products created very strong headwinds for the primary aluminium market in 2015.

With another year of surplus in 2015, the hangover of supply will continue to

weigh down the primary aluminium market in H1:16 and leave prices lower on

a year-on-year average basis.

An improving global economic prospects rather than significant output cuts is likely to lend a modicum of support to the metal, but in the later stages 2016.

Global Surplus (000t)

Fears that weak demand might persist until well into 2016 translated into the

lowest copper prices seen since the global financial crisis of 2008-09. It is estimated that at current prices, more than a third of the copper mining industry

is in the red.

However, the copper market fundamentals, which caused both monetary and

fiscal problems in many major producers such as Zambia, are expected to improve, albeit modestly. As the growth rate in mine supply tapers, the greater

risk to any price recovery has shifted from supply overhang to consumption.

Naturally, China, the World’s number 1 consumer takes centre stage. Despite

threats of forecasted weaker Chinese economic growth, there are some positives for the copper market such as the recently announced US$315bn in the power

network and the “One Belt One Road” project with the Asian Infrastructure Bank.

A gradual rather than a sharp recovery in prices is anticipated as major

infrastructure projects tend to take longer to be implemented.

1,420

1,520

1,620

1,720

1,820

1,920Aluminium Prices US$/t

Q1:16

Q2:16

Q3:16

Q4:16

YoY: ↓17.6%

5.0

5.2

5.5

4.2

2.9

2011

2012

2013

2014

2015

4,050

4,450

4,850

5,250

5,650

6,050

6,450

Copper Price US$/t

Q1:1

Q2:15

Q3:15

Q4:15

YoY: ↓26.1%

371

320

366

177

236

2011

2012

2013

2014

2015

3

Commodity Full Year Price Chart Commodity Developments

Global Surplus (000t)

Nickel was the worst performing commodity in 2015, down 42%.

The market with a long-predicted shortfall, triggered by Indonesia’s ore export

ban in 2014 and consequent cutbacks in Chinese nickel pig iron (NPI), yet to

materialise has deceived many economic agents.

While the industrial metal remain mired in negative sentiment, a combination of further supply constraint and improving demand are expected to lead to a

transition to the onset of the erosion of the record high inventory.

However, given the sheer volume of the stock overhang and notwithstanding

the potential for occasional spikes in prices as the outlook improves, nickel’s overall gains are expected to be moderated on an average annual basis.

Break Even Price (US$/bbl)

Distribution of proved reserves in 2014

8,000

10,000

12,000

14,000

16,000Nickel Prices US$/t

Q1:15

Q2:15

Q3:15

Q4:15

YTD: ↓42.0%

90

140

261

413

441

2011

2012

2013

2014

2015

25

35

45

55

65

75Oil Brent prices US$/bbl

Q1:15

Q2:15

Q3:15

Q4:15

YTD: ↓39.1%

58

59

90

92

94

111

116

117

119

122

124

136

Qatar

Kuwait

UAE

Saudi Arabia

Angola

Libya

Iraq

Venezuela

Algeria

Ecuador

Nigeria

Iran

48%

19%

14%

9%

8% 2%

2014

Total 1,700thousand million

barrels

Middle EastSouth & Central AmericaNorth AmericaEurasiaAfricaAsia Pacific

Following the lifting of sanctions, Iran is

contemplating resumption of crude oil export.

This comes at a time when the market is

already amply supplied, and OPEC members and Russia are vying for market share.

In the longer term, Iran has substantial

reserves – 9.3% of the world total – to raise

production significantly.

These dynamics will thus favour lower oil prices in the coming months.

4

Equities Market Comment Stock Markets Losses (% in USD Equivalent): 2015

The Lusaka Stock Exchange (LuSE) was the worst performing during 2015

due to the Kwacha weaknesses whilst the Botswana Stock Exchange (BSE)

suffered the least due to its resilient currency.

Although there is limited exchange rate risk in Zimbabwe due to dollarization, the local bourse suffered huge losses signalling poor economic performance,

entrenched liquidity challenges and strong negative sentiments in the market.

Foreign Exchange Market Comment Currency Depreciation against the USD (%): 2015

Normalisation of monetary policy in the US together with low commodity

prices had a negative impact to World currencies.

On the backdrop of weak export earnings, countries such as Zambia and

Mozambique saw their currencies on a free fall.

The Kwacha (ZMW) was one the worst performing currency due to depressed

copper prices which triggered job losses and mine closures.

The Nigerian Naira (NGN) which is fixed to the USD suffered least losses

among African currencies.

-50

-40

-30

-20

-10

0

-50

-40

-30

-20

-10

0

LuSE ZSE GGSE DSE NGSE JSE NSE BSE

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

GBP NGN EUR KES BWP GHS TZS ZAR MZN ZMW

Disclaimer The information contained herein has been prepared by BancABC on behalf of itself and its affiliated companies solely for information purposes for BancABC clients. Whilst reasonable care has been taken in the preparation of the report to ensure that the information contained herein is not untrue or misleading however, BancABC makes no representation as to its accuracy or completeness thereof and accepts no liability whatsoever for any errors or omissions contained therein, or prejudice occasioned from use of the said information. Contact telephone numbers: 369701-16; 752383-5

5

Expected Monetary Policy Stance

Tightening

Hold

Easing

n/a

Fed: After the Dec-15 rate hike, the 1st in nearly a decade, the Fed

is expected to continue raising rates gradually, faster than the current market pricing

BoE: The BoE is likely to hike rates for the 1st time since 2006 once

economic conditions improve.

However, rate hikes are less likely to come hot on the heels of the US hikes.

ECB: Monetary easing in the form

of QE is likely to continue.

However, an increase in the pace of QE, that is, further rate cuts or

increase in monthly bond purchases is highly unlikely.

BoJ: Easing in the

form of QE to continue. Additional

easing in the absence of a negative shock to

growth or inflation is

highly unlikely

PBoC: Monetary easing in the form of further rate cuts is expected to

support slowing economy and avoid a sharp slowdown.

Emerging Markets: Monetary

easing bias is expected in Asia

contrasting with end of easing/start of tightening cycles in Latin America

and parts of Central & Eastern Europe, Middle East and Africa

(CEEMEA).

BancABC Markets: Most of BancABC markets and SSA markets at large are

expected to raise rates to ease pressure on their currencies and inflation.

Botswana is likely to hold. SA thrust to

increase interest rates may however, influence Bots to begin increasing its rates in an attempt to limit interest rates differentials.