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 Madagascar Sun 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 Madagascar Sun.
More InformationThe outbreak has killed at least 50 people, Reuters has reported A disease outbreak...
Lahore [Pakistan], February 28 (ANI): Afghanistan skipper Hashmatullah Shahidi won the toss and elected to bat first against Australia...
Karachi [Pakistan], February 28 (ANI): Ahead of their all-import clash against England at Karachi, South Africa's right-hand batter...
Corneille Nangaa, the political leader of the Congo River Alliance, a politico-military group allied with M23, speaks during a rally...
Undated file photo shows a small-scale farmer (L) at her mushroom growing tent in Lusaka, Zambia. (Xinhua/Peng Lijun) In recent years,...
A coalition of militant groups claims the African state's president is responsible for the massacre ...
Israel sustained the West's support for its slaughter in Gaza for 15 months only through an intensive campaign of lies. It invented...
WASHINGTON, D.C.: The Pentagon announced this week that it will cut 5,400 jobs as part of President Donald Trump's plan to shrink the...
SACRAMENTO, California: California Governor Gavin Newsom is urging Congress to approve nearly US$40 billion in federal assistance to...
WASHINGTON, D.C.: A U.S. government scholarship program designed to help students from underserved and rural areas attend historically...
WASHINGTON, D.C.: A proposed 10 percent U.S. tariff on oil imports could deal a US$10 billion annual blow to foreign producers, particularly...
LOS ANGELES, California: The Trump administration is once again challenging California's high-speed rail project, with federal transportation...