Yes, there have been some major setbacks that are making everyone uneasy. But investors should also guard against overstating the risk.
South Africans’ wounded pride was dealt a double blow earlier this month with news of a technical recession and a further credit rating downgrade. The economy declined in real terms at an annualised rate of 0.7% quarter-on-quarter in the first quarter of 2017, pushing the country into a technical recession.
The GDP numbers emphasise that the weakness of the domestic economy should not be understated and there certainly is an urgent need for policymakers to step up with the right measures and reforms to get the economy back on track. An end to political and policy uncertainty will help tremendously.
At the same time, investors should guard against overstating domestic economic weakness. Compared to the first quarter of 2016, the economy grew by 1% in real terms, the fastest growth rate in seven quarters. The economy contracted on a year-on-year basis early last year for the first time since 2009.
Similarly, while the expected one-notch credit rating downgrade by Moody’s is unfortunate, SA’s local and foreign currency ratings remain investment grade. This means local government bonds remain part of key global indices and there is no risk of forced selling (for now).
Technical recession not that significant
هذه القصة مأخوذة من طبعة 22 June 2017 من Finweek English.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة 22 June 2017 من Finweek English.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
