South Africa: SA Investments - the Lifeblood of the Economy - Reach a Positive Inflection Point

analysis

Investment prospects across the spectrum came under the spotlight last week, with the outcome of the SA Investment Conference favourably received and portfolio managers relatively sanguine about bond portfolio flows, notwithstanding the Moody's three-month countdown. Our high yields, it seems, could hold us in good stead.

South Africa's investment fortunes are in the mix after a week during which the country's ability to attract portfolio investment flows and fixed investments took centre stage.

With Moody's reassessing the country's investment-grade rating decision in three months' time, a much tighter timeline than the usual 18 months' reassessment, the countdown is on for the government to show further progress on its implementation of structural economic reforms, including the restructuring of Eskom.

As always, contemplating a possible downgrade triggers much debate about the potential impact a sub-investment grade or junk rating would have on portfolio investment flows. Portfolio investment flows are notoriously hard to predict because much will depend on global economic conditions at the time and whether investors are in a risk-on or risk-off mood. But local analysts are relatively sanguine in their assessment of the possible fallout in the event of South Africa moving into junk territory.

If you take emotions out...

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