South Africa
The South African Reserve Bank held rates, with higher energy prices adding to inflation and BoP risks. The policy rate remained unchanged at 6.75%, with the central bank citing future inflationary pressures. This is in line with our Emerging Markets…
Our EM strategists recommend staying underweight South Africa across EM equity, domestic bond, and sovereign credit portfolios, and continuing to short the rand versus an equal-weighted basket of the US dollar, euro, and yen. Despite strong gains in South…
The precious metal bonanza has not resolved the South African economy’s plight. Nor did it improve its public debt sustainability issues. Investors should brace for a reversal in South African stocks, bonds, and the currency.
The South African Reserve Bank cut rates by 25 bps to 6.75%, with more easing expected as growth slows and inflation stays contained. The move aligns with our Emerging Markets strategists’ view that borrowing costs remain too restrictive amid global trade…
South African inflation will remain at the bottom of the SARB target range, allowing further easing. July CPI came in line with expectations at 3.5% y/y, with core at 3.0%. Our Emerging Markets strategists expect the central bank to keep cutting in…
The SARB cut rates by 25 bps to 7.00%; our EM strategists expect further easing and recommends short ZAR exposure. Real interest rates remain elevated, and high borrowing costs are intensifying debt sustainability concerns, with 10-year yields far above…
In this chartbook, we look at the balance of payments across DM and EM countries. The US does not fare well, but neither do a few other countries.
The South African government seems to believe that some fiscal retrenchment can stabilize the public debt-to-GDP ratio. But that’s a misconception. The country will need draconian spending cuts to achieve this.
South African stocks, domestic bonds, and currency have all rallied since BCA’s Emerging Markets Strategy team upgraded South African assets last month following the formation of the new national unity government. The rally's persistence, however, will depend…
In a recent report, BCA Research’s Emerging Markets Strategy team recommended upgrading South African assets. The team argued that the new national unity government has an opportunity to ease the restrictive policies and implement structural reforms. The…