RE­MAIN­ING BEAR­ISH

Finweek English Edition - - INVESTMENT -

One of my re­cent calls has been for a weaker rand and with the re­cent blowout above R11/dol­lar many read­ers have emailed me ask­ing, “Now what?” My view is that this move is a blow-off of sorts, which will pos­si­bly get worse be­fore re­treat­ing to less scary lev­els be­low R11/ dol­lar, but the big­ger pic­ture re­mains that I am bear­ish on the cur­rency for the first time in over a decade. For­eign­ers are ex­it­ing emerg­ing mar­kets (SA in­cluded) in favour of their home mar­kets, which are of­fer­ing de­cent re­turns. Cou­pled with weak ex­ports, we have net sell­ing of the rand, which is lead­ing to the weak­ness. In short, the days in the sun for emerg­ing mar­kets are over for now; they may well re­turn but this isn’t some­thing that hap­pens in a few weeks or months. Rather, this is a trend that is likely to last at least a few years. Lo­cally, our mar­ket can hold up as most JSE-com­pa­nies’ earn­ings come in dol­lars or eu­ros, which will mean bet­ter rand-based earn­ings when re­port­ing back into our cur­rency.

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