When I grew up, my country was called the “sick man of Europe”. For a long time that was the case – reforms and the re-union of East and West changed that narrative quickly. I have been in SA for almost 11 years (where has this time gone?) now. I started to be a bull and became more realistic over the years – I have seen hope trades, but never a bull market. SA has been the sick man of EM since I arrived. Someone at our desk wanted to buy me a one-way ticket when I told that story (trying to get rid of this bad omen I guess).
For those who regularly read my thoughts, you are familiar with the term “Alles hat ein Ende, nur die Wurst hat zwei”. For those who don’t remember, it roughly means, everything has an end, only the sausage has two. Well, I do think there is a good chance we are coming to an end of the decade-long bear market for SA assets.
Why? The stars are aligning. We are getting very close to having a government of unity, without any extremists in it. One that on paper looks like it can change how things are done. Business confidence will go through the roof if we see ANC + DA + IFP. There is a serious upside gap risk for SA Inc. stocks in that case. Foreigners only hold 27% (?!) of our market, for sure a lot of asset allocators will wake up to SA in the case of this unity government. I know, we have all become “skeptics” over the last 10 years. No one also believes that loadshedding has ended. Somehow, loadshedding is still not back though (hope this did not jinx it).
The stars are aligning: Government change to the better, positioning, valuations and (!!) if this starts, a decent chance for rate cuts starting end of 2024 – that while the U.S. might slow, the USD should weaken. No mention of Transnet from me – but things can get fixed with the right government approaches. Exciting times ahead – fingers crossed now. On a side note, Australians left the country in the 1990s – things weren’t going well down-under. Those who left, cannot afford to come back ever btw. Just sayin’.
Let’s all HOPE: The rally monkey (roaring springbok) will be out soon https://www.youtube.com/watch?v=EmfE4KAZicY