News24
15 May 2019, 20:13 GMT+10
Investors remained underweight on South African stocks even after the ANC's victory in this month's elections, signaling skepticism about the prospect for economic reform, Morgan Stanley has said.
The nation's stocks have attractive valuations, according to the bank's strategists, Marina Zavolock and Regiane Yamanari, who upgraded South Africa to overweight in March, citing depressed valuations, oversold technicals, low investor expectations, and other signals pointing to stabilisation.
"Investors will now view South African equities as a 'show me' story around economic reform implementation, given investors' initial optimism and then disappointment on South Africa's recovery last year and the slower than expected pace of reform implementation in Brazil more recently," Morgan Stanley said in a note to clients.
Investors are awaiting news on the government's new Cabinet, a likely reduction in the number of ministries, the restructuring of power utility Eskom and clarity around land reform. The market will also be eyeing efforts to reduce the country's wage bill, which could see the departure of as many as 30 000 public servants, as well as plans to improve the cost and the ease of doing business.
Foreign investors have 'nothing to fear' from land expropriation - Ramaphosa
"A lot has already been done to improve the regulatory and governance foundation laying the groundwork for increased economic reform and we feel that these underlying improvements are generally under-appreciated by the market," Morgan Stanley said. "The focus will turn to actual implementation of structural economic reforms."
Morgan Stanley expects the election results to buoy South Africa's macroeconomic and reform prospects, and recently picked FirstRand, Capitec, Standard Bank, Tiger Brands, Pick n Pay, Dis-Chem Pharmacies, Anglo American and Glencore as some of the companies best placed to expand their margins over the next two years. The strategists also see attractive fundamentals in diversified miners, the platinum sector, and Sasol in the medium- to long-term.
Get a daily dose of Greek Herald news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Greek Herald.
More InformationLONDON, U.K.: British oil giant Shell has denied reports that it is in talks to acquire rival oil company BP. The Wall Street Journal...
LONDON, U.K.: A little-known investment fund based in the United Arab Emirates has emerged as the most prominent public backer of U.S....
New Delhi [India], July 2 (ANI): The Indian rupee is expected to trade in the range of 85.25-86.25 against the US dollar in the near...
New Delhi [India], July 2 (ANI): The Reserve Bank of India (RBI) has appointed Kesavan Ramachandran as Executive Director of RBI with...
The inflation is driven by the price of services, which recorded a yearly inflation rate of 3.3 percent in June, up from 3.2 percent...
DUBAI, 1st July 2025 (WAM) -- Emirates will be layering on more retrofitted Boeing 777s and Airbus A380s on its existing schedules...
SAN FRANCISCO, California: Under pressure from European regulators, Apple has revamped its App Store policies in the EU, introducing...
US President Donald Trump urged Iran-backed Hamas militants to agree to what he called a final proposal for a 60-day cease-fire with...
(250702) -- ANKARA, July 2, 2025 (Xinhua) -- Syrians shop at a local market in the Onder neighborhood of Ankara, Trkiye, on July 1,...
Washington DC [US], July 2 (ANI): United States President Donald Trump on Tuesday (local time) said that Israel has agreed to the necessary...
U.S. Senate passes Trump's landmark mega-bill The GOP-led Senate on Tuesday passed U.S. President Donald Trump's One Big Beautiful...
(250701) -- WASHINGTON, July 1, 2025 (Xinhua) -- U.S. President Donald Trump speaks to the press at the White House in Washington,...