World Biggest Fund Manager Sees Opportunity in South African Assets

BREAKING NEWSOctober 23, 2024 at 2:23 PM UTC

TLDR

BlackRock Inc. sees recent rally in South African assets as a tactical opportunity, emphasizing the need for sustained gains through economic reforms.
Formation of a business-friendly coalition in June drives a 15% boost in South Africa's equity benchmark, strenghtening the rand by 4.6% and reducing government bond yields by 141 basis points.
Karim Chedid of BlackRock stresses that despite recent positive developments, concrete reforms are essential for maintaining momentum in South Africa's market.

BlackRock Inc., the world’s largest asset manager, views the recent rally in South African assets as a tactical opportunity but stresses that sustained gains depend on the implementation of economic reforms.

Driven by the formation of a business-friendly coalition in June, the rally has boosted South Africa’s equity benchmark by 15%, strengthened the rand by 4.6% against the dollar, and reduced the yield on 10-year government bonds by 141 basis points.

Karim Chedid, head of EMEA investment strategy at BlackRock, highlighted that while South Africa has benefited from recent developments, the company’s view remains tactical for now and concrete reforms are necessary to maintain the momentum.

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Key Takeaways

South African stocks, trading at a significant discount to global emerging markets, have attracted foreign investor flows in the second half of the year, recovering from a decade of stagnation. Chedid added that while the stock rally is broad and sustainable, South African bonds may not experience the same level of recovery due to high interest rates in developed markets. The central bank’s interest-rate cutting cycle is expected to be “shallow,” with 75 basis points of cuts anticipated over the next year.

South Africa

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Finance

Stocks

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BlackRock

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