South Africa Stock Exchange : Forecasts for Coming Semester

South Africa Stock Exchange : Forecasts for Coming Semester

South Africa can play a positive role in this but it needs to resolve its internal friction and develop an orientation that is less inward and more long term. It can use its vast internal advantages to shape a geostrategic role that enhances the broader African development agenda.

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Cities in South Africa are growing rapidly and playing a critical role in the economic growth of the country. A growing educated youth demographics combined with aggressive investment in infrastructure and reforming land markets are producing the current effects for the economy :

  • Adding jobs in the market
  • Improving the city competitiveness and peoples’ lifestyle
  • Facilitating businesses and startup entrepreneurs in many ways
  • Boosting the stock exchange market of South Africa.

Based on our Economic and Financial analysts here are some of the major trends we are predicting for the South Africa Stock Market for this coming second semester of 2017.

Short Term Perspective

According to Trading Economics analysts’ expectations and global macro models, The South Africa Stock Market is collectively expected to trade at 51900.00 points until the end of this quarter. Looking forward, they also estimate it to trade at 50300.00 over the year. The forecasts are projected with the help of an autoregressive integrated moving average model (ARIMA) calibrated using the analysts’ expectations.

 

Nomura, a research and market analysis firm, is predicting a relatively stable and quiet first half of 2017 for South Africa; however, expects things to tremble in the last six months of the year as the elective conference of ANC(African National Conference) comes into view.

ZAR X 2017

2017 : ZAR X Trends

Nomura’s analysts expect a ‘political war’ in December, resulting in some market shocks. However, many events still need to occur before then, such as the state of the nation address in November and the party’s consultative and policy conferences – all while in the background the threat of a cabinet restructure hangs.

Leading Indexes

Interest Rates

No interest rate cuts are expected as long as the inflations’ far end predictions remain above 5.0%. In fact, the risk of rate hikes will only occur further if the rand currency weakens markedly, causing deterioration in wages and expectations.

 

Inflation

A dip in inflation will occur following the effects from the food base in the first half of the year, but it is predicted to bounce back with a headline and core inflation.

Ratings

 

In spite of preventing a cut to junk status last year, the risk is still very active and much alive today. Also, a cut is expected in the mid- and end-year due to slower growth. A last year rating cancellation showing the inability of agencies to decide the growth and reforms direction should eventually run out this year.

Leading Indexes

2017 : Leading Indexes

Malusi Gigaba, recently appointed Minister of Finance after Jacob Zuma sacked Pravin Gordhan, promises wealth redistribution in swing to the left. In such a perpsective,  Nomura warns that the chances are seriously high, leading to an immediate cut to junk. In effet, South Africa’s new finance minister has pledged to “radically transform” his country’s economy, signalling a dramatic swing to the left less than 48 hours after taking up his post.

Gigaba told reporters he was committed to protecting South Africa’s cherished investment-grade credit ratings, this should come as a soothing factor tu assuage the current political turmoil within the government.

 

Fiscal

The fiscal status of the country is expected to be normal in the short run. Nomura predicts mounting medium run risks and wider debt levels of the country. The National Treasury is hopeful to see a recovery in per capita income growth aiding fiscal sustainability; however, statistics do not reflect this.

 

 

External

Despite strong exports contributing to the real net trade, offset is expected due to destocking. The country’s current account will gradually widen back, but downside risks from Trumps’ protectionism may be expected, making it difficult to behold any sources of stronger growth.

 

Policies

There is immense potential for growth-boosting policies and reforms to be introduced this year; however, the chances are very narrow for this happening due to political distractions.

 

South Africa can play a positive role in this but it needs to resolve its internal friction and develop an orientation that is less inward and more long term. It can use its vast internal advantages to shape a geostrategic role that enhances the broader African development agenda.

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