South Africa a ‘favourable investment destination’

Global investment banking, securities and investment management firm Goldman Sachs is bullish on South Africa, which it regards as a favourable destination for fund managers because of the depth of its capital market and the scarcity of other emerging market options.

Goldman Sachs International MD Colin Coleman told the Frontier Forum at the IDC that notwithstanding the local problems – which he described as self-inflicted – South Africa had the deepest capital market in the region and one of the deepest capital markets measured as market capitalisation of the Johannesburg Stock Exchange (JSE) divided by GDP.

Factors positioning South Africa “fantastically” in the current world of investment funds were the local conditions in other emerging markets. “So, when we look at South Africa right now, it actually occupies a very interesting place in the world,” Coleman averred.

While the South African Treasury had put a 2% number on economic growth expectations for South Africa this year, Goldman Sachs, in triangulating for emerging markets and the economic pushes and pulls, were more bullish about South Africa at 2.3%.

“If South Africa just did the basics right, it would grow at 5%, and if it really excelled and produced a perfect performance, it would be at 7%. Growing at 2.3% and 2.4%, as Goldman Sachs forecast for 2015 and 2016, was effectively the country shooting itself in the foot.