South Africa News: What does 2019 have in store?
- 06 mins 36 secs
South Africa News: What does 2019 have in store?
For South Africa, 2018 has seen a new President, two new Finance Ministers and the economy fall back into recession. So, what does 2019 have in store? Kokkie Kooyman, Portfolio Manager at Denker Capital, joins Jenny Ellice to discuss in this news update.
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Hello. Welcome to Asset TV's news update with me Jenny Alice Well, twenty eighteen for South Africa has been a year for a new president to new finance ministers and also the year the economy fell back into recession. So what does twenty nineteen havin still will join me to discuss now is cocky claimant who is a portfolio manager. Danke capital. Well, I want to start with your key takeaways from twenty eighteen. What would you say they are? And how does the investment environment stand? For twenty, nineteen, twenty eighteen was a terrible year, mainly driven by self inflicted wounds. But we mustn't forget the back drop off strong dollar and just flows out ofthe emerging markets that emerging markets with poor balance sheets, of which Africa's one could hit the worst. But in South Africa, I think the major factor was just focus on political issues and not on growth. And what's your outlook for the rand moving for its If you go back to you again, what we say the dollar, the US economy seems to have Pete, what differently has peaked. We're going to skate fewer interest rate hikes, and we thought which Jenny's good for emerging market, so emerging market currencies shoot strengthened. Andre Rand most probably will go along with that. Secondly, President Trump opposer is gently doing the right things. Things are improving, not economically, it, but it is improving. So I would say there and will most probably strengthen. Now. It seems a lot of people are waiting to see what happens in the February budget. What does South Africa need to get out of that? And why is it so important? So there are two things very important for significant. Number One is obviously growth, and how do we get it So to date, there haven't really been credible plans. But more important thing that investors will be looking at is when the finance minister announces the numbers, is how he's going to tackle the debt and how it's going to tackle the state owned enterprises who have included a lot of debt. And I have most of it on the balance sheet. South Africa, the Russkies. It's on its way to a day trip, and he's warned, You know, we're on our way to having to ask the IMF to come and help. So how it deals for the debt is going to be vitally important. Well, South Africa's debt has been racers junk by two out of three of the major rating agencies. How do you see that playing out? Do you think it will? Three of them will end up as generating well if the third one came from Mars and just looked on emotion yet so their figures look at the numbers. We'd be downgraded to junk, but I think and maybe correctly said, I want to give the new president of the new finance minister a chance, and they are making the right noises. But if it does get downgraded and obviously the decoration becomes very important because your interest rates go up, it and interest rates are really becoming an increasingly important or large part off the budget. I put a lot of pressure on where you could spend the money money in other ways. So then let's look at trends for twenty nineteen. What do you think will shape the country, and also how they influencing your investment decisions to number one? The election is going to be vital. Say it seems as if the answer is is gaining. Andi need to go have between sixty sixty five percent to duel off the reforms that they do want to. But more important, you want present from a poser to be stronger. There is still an incredible amount ofthe infighting inside the party forces that are trying to prevent him taking more capitalist approach to create jobs. So he needs to be stronger so you can force through. You know what? He's gender. Should he succeed, then I think there'll be a sigh of relief and wait. Come off such a low bass, we should be able to grow, especially things like agriculture, mining, tourism should pick up. Tourism was also he taught for the child. So Jin Yi should look better. It's again just coming back to the data's, too, How that plays out. Yeah, we're looking from a global perspective on we do face a succession of risks from geopolitics, uncertainty. We got the trade war specific issues as you touched on in emerging markets. So where do you choose to take risk? So generally they always three issues when you think about risk evaluation, risk, currency risk and just the risk ofthe growth coming through. So the first two on your favour in your favor in emerging markets and South Africa specifically market as sold on a lot stocks of Egypt. The currency is solo, so so you just worried about what growth come through, even if it doesn't come through the evaluations on your side. But we think generally, think should look here In South Africa, s O earnings growth has been under pressure. It should pick up. So we're looking a lot of the smaller companies I've been sold off. A lot normally happens. Lo liquidity. When their cellars, they go down a lot off the South African incorporated companies looking for companies benefit from a revival of South Africa. And your banks are always very important as well. Stay the oil that are going to drive, the machines say. Finally, South Africa is an investment opportunity. In twenty nineteen. How's it looking? Sadly, despite everything off said, it looks attractive, but it competes with a lot of other market. I mean Brazil, Mexico, Turkey have all been sold on. So as an international investor, it's a tough choice. It is really going to be up to the election and the budget, a good budget that sits a plan for how the country will grow. He is. I think that will do a lot. But until then, I think a lot of investors will and should maybe stand back cocky. Thank you. Well, that's it. For this update from more videos. You convinced our website asset tv dot co dot saturday. Thanks. Searching.