高盛-全球-宏观经济-作为“重要新兴经济体”，2018年南非在利率与汇率上的可能性及在信贷与股票上的不可能性-20180111-30页_1mb

Summary of EM Strategy Views: South Africa as the "Big EM Story" of 2018

Core Content

The document outlines Goldman Sachs' outlook for South Africa as a potential "big EM story" in 2018, with a focus on rates and FX rather than credit and equity. The analysis emphasizes the political and economic improvements that could drive performance in these asset classes.

Main Points

• Political Transition: The ANC leadership vote in December 2017, where Cyril Ramaphosa narrowly won, is seen as a positive signal for South Africa. While the outcome was close, it signals a shift in leadership that could bring about reforms and improve investor confidence.
• Economic Recovery: South Africa's growth has been sluggish compared to other EMs, with real GDP growth at 0.3% in 2016 and 1% in 2017. However, the document suggests that the economy is beginning to recover, with improved confidence and a potential growth pickup to 2.4% in 2019.
• Disinflationary Trends: Inflation in South Africa has been higher than EM peers in recent years, but the document forecasts a decline to around 4% in 2018, which should support the local bond market. This is attributed to a stable ZAR and falling food prices.
• Interest Rate Expectations: The SARB is expected to cut rates by 75 basis points (bps) in 2018, supporting the local bond trade and improving the ZAR's valuation.
• FX Valuation: The ZAR is considered one of the most attractive EM currencies from a real carry and GSDEER/GSFEER perspective. It has appreciated against the USD, particularly after the ANC vote, and is expected to continue doing so in 2018.
• Credit and Equity: While credit and equity markets have performed well over the past two years, they are not seen as the primary drivers of the "big EM story" in 2018. Credit spreads are expected to narrow by 20bps, but the market remains slightly expensive on an absolute basis. Equity is leveraged to growth but less responsive to domestic cycles, with EPS potentially being negatively impacted by a stronger ZAR.
• Investor Recommendation: The document recommends long local bonds with an unhedged FX position for global investors. It also suggests that EM-benchmarked investors should take overweight positions in South Africa due to its relative value and cyclical dynamics.

Key Information

• Growth Outlook: South Africa's growth is expected to rise from 1.0% in 2017 to 2.4% in 2019, outperforming the EMBI average by more than 1pp.
• Inflation Outlook: South Africa's inflation is forecast to fall more than its EMBI peers, with a target of 4% in 2018.
• FX Forecast: The ZAR is expected to appreciate to 11.50% against the USD over the next 12 months.
• Rate Curve: The South African rate curve is relatively steep, offering a local rate risk premium of 2pp above USD sovereign bonds. This is seen as a key advantage for local bonds.
• Credit Spreads: South African sovereign credit spreads are expected to decline by 20bps over the next year, outperforming the EMBI benchmark.
• Equity Dynamics: South Africa's equity market is heavily influenced by the external environment, and while it has shown strong EPS growth due to a depreciating ZAR, it is not expected to outperform MSCI EM as the currency strengthens.
• Valuation: South Africa's local bonds are considered the most undervalued among EMs, while FX and rates offer better value than credit and equity.
• Fiscal Concerns: Despite the positive outlook, fiscal sustainability remains a concern, particularly with the debt-to-GDP ratio projected to rise to 58% by 2020.

Asset Class Performance

Conclusion

South Africa is positioned as a key EM story in 2018, primarily driven by rates and FX. While credit and equity have shown strength in recent years, they are not expected to outperform as much as FX and local bonds. The document highlights the importance of a political and economic turnaround and disinflationary trends in supporting the local bond and FX markets, with a cautious but optimistic outlook for the overall asset class.