There are dark clouds aplenty casting shadows over SA’s economy and its equity market. But Morgan Stanley argues that the potential rewards for investors mean the country’s stocks are worth the risks.
“China’s recovery should filter through to SA,” the analysts wrote as they cited factors behind a decision to upgrade their recommendation on the country to overweight from equal-weight. Morgan Stanley says investors are turning more optimistic; a recent survey indicated that foreign equity investors were more likely to add South African stocks than reduce in the next six months. While economic data remains weak, money managers’ expectations are already below consensus. What’s more, elections on May 8 could mark a turning point for performance as President Cyril Ramaphosa looks to revive an economy damaged during predecessor Jacob Zuma’s scandal-marred rule.