Political Uncertainty South Africa - Gordhan Charges
South Africa remains vulnerable to a
sudden shift in investor sentiment. The charges laid against Pravin Gordhan by the National Prosecuting Authority
is another incident in a series of events relating to our leadership crisis. The immediate reaction by the markets
indicates that there is concern. However, the markets are seemingly adopting a wait-and-see approach as the selloff
has been nowhere near as extreme as what we saw during ‘Nene-gate’ in December 2015.
There is a heightened level of uncertainty around the
leadership of the National Treasury which has eroded investor confidence. The prevailing global tailwinds supporting
economic growth like the growing demand for emerging assets
(bonds and equities), improved Chinese growth and capital
inflows received by SAB Miller shareholders have done little to allay investor concerns. So while we acknowledge
these tailwinds can be positive for our economy over the long term we cannot tell what the immediate future holds for
our equity markets and the ZAR.
Advice
to investors
Investors can expect a period of heightened volatility and
uncertainty ahead.
Portfolio Weighting Advice
Underweight JSE (Hold Resources, Dual Listed)
Offshore Overweight
Local Property Hold
Cash Overweight
