Bloomberg | | Posted by Zarafshan Shiraz
South Africa is a standout among its global peers that offers an unexpected advantage: accessibility. This is according to RMB brokerage Morgan Stanley.
The rand has weakened about 9% against the dollar and the euro, and about 12% against the British pound, in the last year. The depreciation, together with fairly subdued inflation in South Africa compared to abroad, means that the relative prices for local goods and services for sale are cheaper than elsewhere.
“Consumers can drink almost three cappuccinos in South Africa for the price of one in the United States and can spend four nights in a Cape Town hotel for the price of just one in London,” said Mary Curtis, strategist at the broker, and Andrea. Masia, an economist.
“Looking at the bigger picture, the relatively low prices of South African goods and services are just another example of value in South Africa’s assets,” they wrote in a note to clients.
Valuations for both bonds and stocks appear cheap compared to peers, with elections due later in the year potentially providing a new catalyst to unlock some value, they said.
Meanwhile, price disparities support the continued recovery in South Africa’s net tourism receipts, while the weaker currency should result in lower import growth, they said. Both help offset the slide in export prices and limit the potential deterioration in the current account.
This story was published by a wire agency feed without modifications to the text. Only the title has been changed.
