Junked: SA begins to bleed capital
Rand expected to be hammered as investors pull out
South Africa begins this week on a new low, with potentially billions of rands in capital beginning to flow out of the country as investors react to the credit ratings downgrade on Black Friday. S&P Global Ratings downgraded South Africa's local currency rating to junk and cut the long-term foreign currency rating further into sub-investment grade. Also on Friday, Moody's Investors Service placed South Africa on review for downgrade. S&P said the downgrade reflected a further deterioration in South Africa's economic outlook and its public finances. Among the factors hurting South Africa was that its growth was among the weakest of emerging market sovereigns, at the less than zero per capita that it now is. But S&P said it could raise the ratings if economic growth or fiscal outcomes strengthened. The ratings action could trigger a sell-off in government bonds by institutional investors from mostly developed countries. This in turn could lead to domestic inflationary pressures as t...
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