Internationally South Africa is struggling in terms of growth. What about the rest of the world?
There has been a rapid decline in growth worldwide, not just South Africa. The International Monetary Fund has announced the global GDP figures and this showed a downwards movement of 3.4%. This affects even the strongest economies in the world like China- their growth rate has dropped from 8.4% to below 6%. Therefore, although South Africa’s growth has been slow, it is heading in the right direction and there are still profitable investment opportunities in our own country.
The struggling pound and European investments
Last week the pound weakened by more than 6% in one day- the worst decline in 31 years. This time last year the rand traded at R24 against the pound, and currently its trading at R17 against the pound. This is good news for South African tourist, but bad news for European investors. On the up side, it is good news for European exports.
For 34 consecutive weeks there has been an outflow of investments out of Europe and for the past year, this has equated to R100 billion which means great concern among investors. Adding to this concern is a claim of $14 billion by the American Department of Justice against Deutsch Bank regarding mismanagement of sales of bond mortgages. Should this claim go through, the effect will be clearly seen in banking both locally and internationally.
The rand has performed well in the last year and has strengthened by 13% against the dollar and it seems that we may be breaking a negative five-year curve. Should international reserve banks leave their interest rates unchanged, south Africa could see a further strengthening in the rand to R12 against the dollar.
Investors need to ensure they have a diversified portfolio and that their international exposure is minimal.
Investment tips for the coming week
Keep an eye on the JSE All Share index and the Top 40. Look at your exposure and don’t over capitalise in terms of international investments. Make sure you speak to an accredited financial advisor and have a diversified portfolio.