South African stocks recently surged after President Jacob Zuma reinstated Pravin Gordhan as finance minister, calming market nerves. Zuma fired the previous finance minister, Nhlanhla Nene, for a relatively unknown lawmaker, David van Rooyen, but ultimately decided on reappointing Pravin Gordhan, reports Renee Bonochris for Bloomberg. Gordhan was the finance minister from 2009 to May 2014 when he was replaced by Nene.
Looking beyond the political hoopla, many still believe South Africa’s economy has its work cut out for it as the government tackles high unemployment and high debt. Credit agency Fitch recently downgraded South Africa to just one notch above speculative-grade status and stated that the dismissal of Nene had “raised more negative than positive questions.” [South Africa ETF’s Precarious Position]
“Moody’s said large cities, which account for a quarter of the South African population — and regional governments are exposed to the country’s economic struggles, and “large cities — will continue to register high demand for welfare benefits and infrastructure. In addition, they feature moderate-to-high debt levels, which add rigidity to their budgets,” according to Barron’s.
iShares MSCI South Africa ETF
