Local markets are giving investors reasons for optimism, but that doesn’t mean you should cash in all your offshore chips, says Johan Minnie, CEO of Consult at Momentum.
South Africa is having a moment. After years of worrying about everything that could go wrong – loadshedding hammering businesses, the rand freefalling, political uncertainty making people nervous – investors are now finding reasons for optimism. In recent months, local markets have performed better-than-expected, and the mood is cautiously hopeful.
But while there are positive signs, investors should be careful not to mistake green shoots for structural improvement. South Africa still faces numerous challenges, including low economic growth and stubbornly high unemployment, making it a little too early to declare a full recovery.
As proud South Africans, we’re all thrilled when the country is doing well. But from an investment point of view, it’s not necessarily a reason to bring all your money home. Investing and patriotism are not the same thing. Just because we’re all cheering for Bafana Bafana or the Springboks, doesn’t mean we should abandon our offshore investments. Investors would be wise to bear in mind that markets tend to move ahead of economic reality, meaning much of the positive sentiment may already be reflected in asset prices.
