South African markets and country-specific exchange traded fund strengthened as traders look to the first budget plan under new leadership.
The iShares MSCI South Africa ETF (NYSEArca: EZA) added 1.9% Wednesday.
Traders and analysts were optimistic about the emerging country’s outlook after President Cyril Ramaphosa, who took office last week, revealed the first budget, Bloomberg reports.
“The bond market likes it, the currency market likes it, and therefore the equity market will like it eventually too,” Julian Rimmer, an emerging-markets trader at Investec, told Bloomberg. “This looks to me like exactly the kind of slightly more conservative, stable, playing-it-steady approach that the markets were hoping to see from Ramaphosa.”
Finance Minister Malusi Gigaba assuaged investors that the government would avoid another downgrade to junk and outlined plans to raise value added tax, boost revenue and narrow this fiscal year’s budget deficit from initial forecasts.