Investors, which are closed by bad news from South Africa, risk losing stocks on the stock market, according to the Standard Bank Group.
The country's basic index fell 11% last year amid sustained economic growth, worsening fiscal environment and political upheaval, while tightening Federal Reserve policies and fears of the trade dispute between the US and China also have an impact on emerging markets .
But stocks are expected to recover in 2019 when the economy is gaining momentum, Standard Bank analysts say, including chief economist Elna Mulman in her quarterly review of African markets released Friday.
Even after the 7.2-percent rally from mid-December, the FTSE JSE Africa All Share Index is still close to its cheapest index for its peers in emerging markets for almost seven years, according to Bloomberg. This is too pessimistic, given the rebound in consumer spending, healthier household balances, and improved consumer confidence, analysts say.
"The worst growth scenario is estimated in South African stocks and we believe it is too much," analysts said. "We remain constructive with regard to the prospects of the South African stock market and we believe that 2019 will introduce a higher growth path for South Africa."
Not everyone agrees. Last year, foreign investors sold $ 53 billion. net South African shares and scattered another 12.1 billion Randa in January. The economy is expected to grow by only 1.5% in 2019, after a 0.7% expansion expected last year. Investors are also concerned about President Cyril Ramaphos's ability to carry out much needed reforms such as elections in May.
"Investors who are skeptical of growth expect a real recovery from growth," said Standard Bank analysts. "Even taking into account the more pessimistic prospects for investor growth, we believe the market is rejecting bad news too much by deactivating more in 2018 than during the earlier phases of risk that hinder the global financial crisis and the Asian crisis since 1998