PITFALLS AND PREDICTIONS
Less sheep mentality needed to identify gaps and herd SA towards true growth
Focusing on above-the-line structural reform ignores the opportunities available in township economies, writes Peter Attard Montalto
The election of Donald Trump in the US is bad news for emerging markets. While his precise policy platform is still less than clear, there does seem to be enough clarity already on several key vectors of policy. Most important will be large tax cut-led fiscal loosening to promote infrastructure investment, which is likely to increase US Treasury issuance and steepen the US yield curve and the on-shoring of offshore US corporate savings that can strengthen the dollar. Protectionism and faster growth can add an accelerated pace of Federal Reserve rate tightening. As more money has flowed into emerging-market funds, so indexed investors have been forced to buy SA regardless of their underlying questions about the economy, exacerbated by the fact that most fund managers have wished to remain relatively close to benchmark and not buy less of SA than they might otherwise have done. However, if the implications of a Trump presidency are that carry is no longer king and we can expect outflo...
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