There are dark clouds aplenty casting shadows over SA’s economy and its equity market. But Morgan Stanley argues that the potential rewards for investors mean the country’s stocks are worth the risks. SA benefits from its relatively high trade with Asia, and is the country most closely linked with China of all those in Eastern Europe, the Middle East and Africa. SA is seen as leading a rebound in emerging markets this year, Morgan Stanley analysts Marina Zavolock, Regiane Yamanari and Mary Curtis said in a report. “China’s recovery should filter through to SA,” the analysts wrote as they cited factors behind a decision to upgrade their recommendation on the country to overweight from equal-weight. Stocks traded in Johannesburg have lagged their developing-market peers in 2019, partly reflecting an exit by overseas investors. Foreigners have been net sellers of about $2.3bn in South African stocks this year up to March 13, the most for this period since Bloomberg started tracking the...

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