Citigroup Sees South African Equities Outperforming Emerging Markets
TLDR
- South African equities expected to recover and outperform emerging market peers, supported by pro-reform agenda
- Citigroup cites South Africa's economic growth focus and lower interest rates as key drivers boosting investor confidence
- Market outlook positive with political stability, reform efforts, and strong demand for sovereign bonds in South Africa
Citigroup expects South African equities to recover from recent losses and outperform emerging market peers, supported by the pro-reform agenda of the country’s coalition government formed after May elections.
George Asante, Citi’s head of African markets, highlighted South Africa’s focus on economic growth and lower interest rates as key drivers boosting investor confidence, even amid global headwinds like Donald Trump’s recent US election victory.
The FTSE/JSE Africa All Share Index remains up 11% in dollar terms this year, outpacing MSCI’s emerging market equity index. A sentiment boost followed S&P’s recent upgrade of South Africa’s credit outlook to positive and the oversubscribed $3.5 billion Eurobond sale. While foreign investors have offloaded $6.1 billion in South African stocks this year, outflows slowed significantly in November.
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Key Takeaways
Citigroup’s optimism reflects confidence in South Africa’s stable political environment and reform efforts. Lower interest rates and enhanced market clarity are expected to attract new investments, bolstering equities. Despite global uncertainties, South Africa’s progress toward sustainable growth and strong demand for its sovereign bonds position its markets favorably for continued recovery.
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