In this article, Victoria Reuvers, Managing Director of Morningstar Investment Management South Africa, addresses two frequently asked questions –
1. Why should I have exposure to South African equities/assets in my portfolio given the state of the economy?
2. Given the government’s debt burden, what will happen to my investment if they implement prescribed assets?
South African investors have had no shortage of challenges over the past decade. Going into 2020, we were all hopeful that this was going to be the year we would turn the proverbial ship around. Covid-19 and its associated challenges have, however, steered us into unchartered (and choppy) waters. From a South African perspective, the economic shock came at a time when we were already under pressure. The impact of job losses and the lockdown will have a big impact on South Africa’s GDP growth. One prevalent effect has been the decline in business and investor confidence. According to Kevin Lings, chief economist at Stanlib, confidence indicators are now at their lowest levels since 1975. Confidence is a key ingredient required to grow an economy. This lack of confidence has understandably caused investors to question their investment in South Africa. read more