SA is not among emerging markets UBS likes, analyst Michael Bolliger says
Political decisions typically do not play a major role in UBS’s investment decisions, but SA is an exception ‘due to the very binary nature of the outcome’, Bolliger says
Dubai/London — There’s one emerging-market country that Michael Bolliger can’t get bullish about at the moment: SA.
President Jacob Zuma is fighting to stay out of court before the ANC votes for a new leader in December. He’s pushing for former African Union Commission chairperson Nkosazana Dlamini-Zuma — his former wife — to succeed him, but most analysts in a Bloomberg survey think Deputy President Cyril Ramaphosa probably will.
It is more noise for a market that has already paid a price for political wrangling when it lost two of its investment ratings in April.
"Political decisions typically don’t play a major role in our investment decisions, but in SA’s case, it’s an exception due to the very binary nature of the outcome," Bolliger, the head of emerging-market asset allocation at UBS Wealth Management, said in an interview in Dubai.
The rand, which was one of the world’s best performing currencies for most of the first quarter, is not among emerging nations’ top-10 gainers in 2017.
Aside from SA, Bolliger is bullish on developing equities, even after companies handed investors gains of about 20% in the second quarter of 2017 on a yearly basis, compared to about 12% for those based in the US.
The MSCI emerging markets index has advanced almost 30% in 2017, boosting the gauge’s price-to-earnings ratio over the next 12 months to the highest level since January 2010.