• Overview – In a challenging market environment, macroeconomic and policy divergence – the ‘new normal’ – remains the critical foundation of our updated views and forecasts, with the US economy, USD and US rates leading the way higher. This will ev...
USD-ZAR likely to see further upside in Q2; we raise our 2015 FX forecasts, still anticipating a Q2 peak
• In line with our new FX forecasts, we downgrade our short-term FX weighting on the ZAR to Neutral
• We upgrade our medium-term ZAR FX weigh...
• Growth remains weak – lower price of imported oil to provide some reprieve
• Politics will remain key to labour relations and of wage negotiations
• Debt ratios to peak at a high level, signalling ongoing vulnerability
Direction signal now neutral from negative as foreign flows to EM debt, especially oil importers, improve
• Spread signal turns positive on flows to high-yielding oil importers (INR, ZAR, TRY, IDR) plus Brazil
• October fund allocations reflect ...
SARB shifts balance of risks on inflation; lower oil prices offset persistent domestic pressures
• Post-strike production volumes of platinum-group metals are rising, boosting overall export revenues
• Sharp oil-price fall in October outstrips p...
Direction signal stays negative on weak demand for EM debt; EM FX weakness puts pressure on EM bonds
• Structural investors continue to favour Asia bonds; hard data supports Korea and Indonesia
• Flow rotation continues from Russia, Turkey and So...
• We revise down our South Africa 2014 GDP growth forecast to 1.4%
• Amid the threat to bank ratings, credit conditions are tightening; household deleveraging persists
• Weak growth and Eskom support package are likely to delay fiscal consolidatio...
Direction signal stays negative on weak demand for EM debt
• Allocations moved towards Brazil in August on Marina Silva, a catalyst for change; now Dilma fights back
• Brazil’s subsequent underperformance makes it cheap and positioning is not skew...
We give our initial reaction to the budget – there are some positives for local markets
• The Treasury targets faster fiscal consolidation for the current year and the medium term
• Delivery risk will be linked both to the external environment a...
• The South African Reserve Bank (SARB) has raised its repo rate by 50bps to 5.5% for the first time since the 2008-09 global economic crisis. Although there was a modest downward adjustment of growth forecasts for 2014 and 2015, revised SAR...
• Weaker momentum in the domestic economy and a still-sluggish external environment suggest softer growth. We cut our 2013 GDP growth forecast to 2.2%, from 2.7% previously
• Given a substantial negative output gap, South African interest rates are...
• Local fundamentals are likely to prevail now that some element of an early tapering of QE is priced in
• We remain Overweight FX and duration on Nigeria on supportive fundamentals and valuations
• We also maintain an Overweight duration stance o...
• Growth should remain strong in 2013, boosted by high government spending and low interest rates
• An expansionary fiscal policy will continue to contribute to a widening fiscal deficit, estimated at 6.4% in 2013
• Deterioration in South African ...
• Growth momentum in Sub-Saharan Africa remains largely positive, despite uncertainty related to Fed tapering expectations and slowing trend growth in China
• African economies will not be impacted uniformly by a reduction in QE. More liquid marke...
• Prospects in the Sub-Saharan African region remain largely positive, despite uncertainty related to market expectations of Fed tapering, and a slowdown in China’s growth trend to more sustainable levels.
• South Africa is more susceptible to glob...
• We expect the Reserve Bank to keep rates on hold today; we see a 30-40% chance of a cut
• A 50bps cut would not change our market view: Overweight ZAR rates, Underweight ZAR FX
• We stay Underweight on FX as risks from the mining sector and the...
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