Explore the Category

Cabinet purge ignites downgrade decision

04 April 2017 | Economy

A lot has been said over the past year in the media regarding the possibility of whether South Africa (SA) will be downgraded to “junk status” by the respective rating agencies, namely Moody’s, Standard and Poor’s (S&P) and Fitch. An emphasis has been placed on the implications for our stumbling economy, the government, corporates, consumers and what the government is required to do in order to avoid a possible downgrade. Last night, S&P was the first rating agency to make a move following Jacob Zuma’s cabinet reshuffle, which was surprising as that they were initially only meant to review SA’s credit rating on 2 June 2017. As a result, SA has lost its investment-grade credit rating from S&P for the first time in 17 years. They have reduced our foreign currency rating to BB+ (junk) and our local currency rating to BBB- (still investment grade) with a negative outlook stating that “the downgrade reflects their view that the divisions in the ANC-led government have led to changes in executive leadership, including the finance minister and have put policy continuity at risk”. Despite the fact that we have been downgraded on our foreign-currency rating, it is important to realise that these events were driven by politics and that fundamentally, nothing has changed. Furthermore, this article will unpack what a sovereign credit rating is and what “junk status” means for SA and its citizens. Moody’s, which currently rates SA two notches above junk status with a negative outlook has placed SA on a downgrade review. Moody's said “changes within a government do not generally signal material changes in a country's credit profile, however, the timing and scope of the reshuffle raises questions over the signal they are sending regarding the prospects for ongoing reforms, the underlying strength of SA's institutional framework, and the fragile recovery in the country's economic and fiscal position”. Moody’s is expected to publish its review on 7 April 2017, and Fitch could announce its review at any moment but is expected to review on Friday as well.

SA loses investment grade (IG) status on anticipated unfavourable policy shifts

04 April 2017 | Economy

Although Standard and Poor’s Global Ratings (S&P) was scheduled to release a ratings review on SA on 2 June 2017, recent changes to the country’s executive leadership have, in its view, brought policy continuity into question.

The power of diversifying across investment styles

04 April 2017 | General

Investors are often told to diversify their risk across asset classes, sectors, geographies and currencies, but diversifying portfolios to include complementary investment styles is rarely mentioned. When market fundamentals change significantly, style diversification can be particularly important.

Cabinet reshuffle: how it impacts you

03 April 2017 | Economy

“Don’t get distracted, focus on the fundamentals”, says Mokgatla Madisha, Head of Fixed Interest at Sanlam Investment Management. The political situation in South Africa has been fluid for quite some time so the events of last week are not all that surprising. They serve merely to distract government and business from focusing on the real issues we need to solve if South African is to deliver the kind of growth that is going to reduce unemployment and poverty, he says.

quick poll

Question

Do you think short-term insurance broking will survive the AI plus humanoid robotics age?

Answer

Human first always Not a chance Possibly maybe Yes, but reimagined

View the Results