Cyril’s huge challenge
Just because Jacob Zuma has resigned as president doesn’t mean it will be smooth sailing for SA assets, investors and analysts say. His ouster has been priced in, and his successor, Cyril Ramaphosa, has the daunting task of reforming a battered economy.
The next critical milestone will be an assessment by the end of next month of South Africa’s credit rating by Moody’s Investors Service, which placed the nation on review for downgrade in November.
Here’s what analysts and investors are saying:
Peregrine Treasury Solutions
Corporate treasury management, Bianca Botes
Global markets are smiling on SA, as it’s the second African country in a matter of a few months to take a stand against corrupt leadership and skewed politics.
Should the State of the Nation address and the budget speech go down without too much criticism, one can almost assume that Moody’s will hold off from downgrading SA.
The rand should trade in a range of 11.70 to 12 per dollar leading up to the budget speech.
Investec Bank
Emerging markets trader Julian Rimmer
Everything looks positive, obviously in emerging markets it doesn’t always work out that way. International investors have generally been underweighing SA for several years.
I think they will all be scrambling to increase those weights. Much of this was expected.
It’s a huge relief for the market that it’s behind us and that we can actually just hope to see Ramaphosa doing some of the things that he’s promised.
Ashburton Investments
Money McCurrie
This is just a euphoric bounce on the back of the news and that could pull back just a bit. Unquestionably, the outlook is positive for South Africa for at least the shorter term.
This is the Cyril bonus; once the Cyril bonus is out of the system we will return to more conventional non-politic economic events that will drive markets.
manager
Afrifocus Securities
Wayne
Money manager Ferdi Heyneke A lot might be priced in at the moment with the current news. I think this was something that looked like it was going to come and since December the market has had a pretty big move, in particular on some of the banking stocks. – Bloomberg