STEPHEN CRANSTON: Among Civets and Britms, we will not be a polecat after downgrade
Good global growth and risk-on in financial markets will offset the damage from junk status
Sovereign downgrades have become more and more of a feature, not just of SA but many other emerging markets. Over the past five years, S&P Global Ratings, one of the ruling troika of ratings agencies, has upgraded on average one sovereign per month, while more than two sovereigns were downgraded. And right now, negative outlooks outnumber positive outlooks by a four-to-one margin. It’s a good thing one of the country’s leading experts on the topic, Investec chief economist Annabel Bishop, has given me access to her insight. Bishop has created a whole new class of emerging markets. You might have heard of Civets (Colombia, Indonesia, Vietnam, Egypt, Turkey and SA). Bishop has coined the somewhat less catchy term Britms. These are countries that display the same characteristics in terms of credit ratings: as a block, they have diverged from the rest of the emerging markets. Not the fragile five; let’s call them the sinking six: they are Brazil, Russia, India, Turkey, Mexico and SA.
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