JP Morgan dropped South African stocks from a positive to a neutral rating yesterday. They worried about slow economic growth and questioned if government changes would work. The bank said South Africa seems attractive to investors because of planned reforms. Yet they believe these changes will not push growth above 2 percent in the next two years.
South Africa has struggled to create strong economic growth since the 2008-09 financial crisis. The country needs faster expansion to help reduce massive unemployment and the gap between rich and poor. South African Reserve Bank leader Lesetja Kganyago spoke to Reuters in January about future expectations. He suggested the nation might see growth near 2 percent when 2025 arrives.
President Cyril Ramaphosa recently announced more reforms to boost economic growth. His plan focuses on improving failing state companies and building more infrastructure projects. A better power supply exists compared to last year, which helps business conditions somewhat. Many companies still expect tough operating challenges despite the Government of National Unity pushing for growth.
Foreign investors will probably wait before committing money to South African markets, and local investors face uncertainty about how well the coalition government will execute planned reforms. Donald Trump complicated matters by cutting US financial support to South Africa last month. He criticized their land policies and their case against Israel at the International Court of Justice.
JP Morgan noted that strained relations between South Africa and America affect market confidence. Issues like land expropriation, the ICJ court case, and affirmative action policies create uncertainty, making investors nervous about South African financial assets. Both international tensions and domestic challenges leave South African markets facing an uncertain future.
South Africa has struggled to create strong economic growth since the 2008-09 financial crisis. The country needs faster expansion to help reduce massive unemployment and the gap between rich and poor. South African Reserve Bank leader Lesetja Kganyago spoke to Reuters in January about future expectations. He suggested the nation might see growth near 2 percent when 2025 arrives.
President Cyril Ramaphosa recently announced more reforms to boost economic growth. His plan focuses on improving failing state companies and building more infrastructure projects. A better power supply exists compared to last year, which helps business conditions somewhat. Many companies still expect tough operating challenges despite the Government of National Unity pushing for growth.
Foreign investors will probably wait before committing money to South African markets, and local investors face uncertainty about how well the coalition government will execute planned reforms. Donald Trump complicated matters by cutting US financial support to South Africa last month. He criticized their land policies and their case against Israel at the International Court of Justice.
JP Morgan noted that strained relations between South Africa and America affect market confidence. Issues like land expropriation, the ICJ court case, and affirmative action policies create uncertainty, making investors nervous about South African financial assets. Both international tensions and domestic challenges leave South African markets facing an uncertain future.
