- Pandemic hit African region witnessed less inward investment, but South Africa remains the attractive destination of Investment in the region (South Africa news)
- South Africa remains the better valued investment destination in the region, thanks to South Africa’s contained price pressures, compelling valuations, and the boost to commodity prices from Chinese economic stimulus are among factors making it a favoured bet.
The Russia-Ukraine crisis, an expected hike of US federal rates, higher US treasury yields are some of the key factors that could slow down the flow of capital in 2022. But despite this slow movement, when it comes to the African region, the preferred destination is South Africa for many investors. South African assets provide an attractive risk premium compared to other emerging markets.
The stock market indicators show a robust bounce back of the south African economy. Stocks on Johannesburg’s benchmark FTSE/JSE Africa All Share Index have shown a massive gain in recent weeks, spurred on by strong prices for commodities. The gauge set an all-time high last week and has returned 7.5% in dollar terms this year, compared with a 1.1% retreat for the MSCI Emerging Markets index. Another attractive trend is the bond yields in South Africa. South African government bonds have already returned 8.9% in dollar terms in 2022, the best performer out of 19 developing-nations which is giving a clear trend of the future direction of economic growth. The strength of South Africa Rand among all the currencies in the region also give ample opportunity for investment in currency trading. Half of the 24 developing-nation currencies lost out to US Dollar but Rand remained stronger and gaining.
