Polya Lesova, a reporter for MarketWatch, published the following story:
With the African National Congress poised for a strong victory in South Africa's general election this week, now is the time for investors to get exposure to attractive stocks in the African continent's biggest economy, says a fund manager at T. Rowe Price. "We think stocks are cheap. It's a good environment for stock picking," said Joseph Rohm, manager of the T. Rowe Price Africa & Middle East Fund, which had $151 million in assets as of late March.
"We'd look to accumulate some of the better quality companies [in South Africa] on the back of the election," Rohm said in a phone interview Friday.
Rich in natural resources, South Africa is a major exporter of gold, diamonds, metals and minerals. Its economy has been hurt recently by a drop in manufacturing and falling commodity prices.
With the African National Congress poised for a strong victory in South Africa's general election this week, now is the time for investors to get exposure to attractive stocks in the African continent's biggest economy, says a fund manager at T. Rowe Price. "We think stocks are cheap. It's a good environment for stock picking," said Joseph Rohm, manager of the T. Rowe Price Africa & Middle East Fund, which had $151 million in assets as of late March.
"We'd look to accumulate some of the better quality companies [in South Africa] on the back of the election," Rohm said in a phone interview Friday.
Rich in natural resources, South Africa is a major exporter of gold, diamonds, metals and minerals. Its economy has been hurt recently by a drop in manufacturing and falling commodity prices.
South African equities have underperformed other emerging markets this year. Johannesburg's benchmark All Share stock index is down 4% year-to-date, while the MSCI Emerging Markets index is up 13%.
"With the ANC, you get a continuation of existing policy and business friendliness," Rohm said. "I don't think there's a shift to the left."
The ANC's Zuma, a key leader in the fight against apartheid, is seen as charismatic, but has been plagued by corruption allegations. Also, some investors are wary of Zuma because he is supported by the Communist Party and trade unions.
"Does he [Zuma] have to reward all the voters that put him into power?" said Nigel Rendell, senior emerging markets analyst at RBC Capital Markets. "His support is from low-income people. We need to watch that fairly closely, that he doesn't put undue pressure on [Finance Minister Trevor] Manuel."
Analysts stressed the importance of keeping the widely respected Manuel in charge of the finance ministry.
"The number one concern is economic policy and that means does he [Zuma] keep Trevor Manuel at the finance ministry," Rendell said. "He has to. He really has no choice. He is wise enough to know that."
Rohm agreed: "What will be important is the reappointment of Trevor Manuel. We'd like to see a continuation of the strict fiscal policies that we've had. He's done a fantastic job over the last two terms."
Among the risks facing South Africa are the twin deficits the country is now running as well as rising unemployment, Rohm said.
Still, Rohm believes that now is a good time to buy attractive South African stocks.
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