Goldman Sachs has revealed that the BRICS emerging markets which includes Brazil, Russia and India, and South African rand, are still the best investment bets in 2017.
Despite growing fear about the volatility of the economy of these countries, especially the dwindling SA rand, Goldman Sachs analysts believe “staying the course” on these emerging markets will still yield the best returns for investors.
This announcement by Goldman Sachs after much consideration of the poor performance of the Chinese yuan, as well as other traditionally safe Asian economies which are now becoming vulnerable to U.S. President-elect Donald Trump’s protectionist election manifesto being translated into policy and regulatory action.
“Mapping U.S. ‘swing state’ job losses with emerging-market-U.S. trade flows suggests that these ‘good carry’ candidates appear less likely to face U.S. import restrictions because their exports compete less directly with U.S. labor,” the Goldman analysts wrote.
The analysts further added that while all imports would be affected as Trump’s America focuses inwards, the BRICS countries are much less likely to face U.S. import restrictions because their exports compete less directly with U.S. labor.
Citations were equally made on the improving balance of payments, falling paths for inflation, attractive real yields and prospects for stronger growth this year in the four big emerging markets they favor.
The best times to gain exposure to dollar-yuan weakness have tended to be when China concerns were off radar screens, or after periodic interventions that flushed out bearish speculative positions and provided attractive entry points,” Goldman Sachs wrote, “That remains our view today.” .
Meanwhile, the ruling ANC has dedicated its 105 anniversary to discussing issues affecting the country such as unemployment and economic growth.
President Jacob Zuma will deliver the party’s plans for the year at its 105th birthday celebration at the Orlando Stadium in Soweto on Sunday but Gwede Mantashe has given a hint that unemployment, job creation and growing the country’s economy are some of the issues the party’s statement will deal with. With this, it is believed the SA rand will gain more strength.