By Shalin Bhagwan, head of fixed income at Ashburton Investments.
While our developed market counterparts focused on the messages from China, Trump and Macron or perhaps even a new-found emphasis on the politics of inclusion and equality, I suspect that for most South Africans, it was Cyril Ramaphosa that stole the show at last week’s World Economic Forum in Davos, Switzerland.
The first opportunity to witness an (almost) unfettered and newly-elected President of the ANC, Cyril Ramaphosa, engage global business leaders on the world stage must surely be a clear sign of the positive things to come for South Africa in 2018, and beyond.
If we could distil Ramaphosa’s key message to leaders like Christine Lagarde of the IMF or famed CNN-reporter Christian Amanpour, it would be this: South Africa is back, possibly from the brink, but from here on count on us to get stronger, better, faster.
Stronger governance through a resolute focus on stamping out corruption as well as stronger relations between government and business.
Better accountability to the people of South Africa and certainty of government regulatory policy.
Faster progress to achieving the above as well as the goals that the country has set itself through its longer-term stated initiatives such as the NDP.
And all of this coalesces the central message: South Africa is back and open for business.
But, South Africa is not an island, and if DP Ramaphosa was in Davos to garner international support for the ‘new’ South Africa then are the doors to international investment tightly shut or slightly ajar?
It would appear to be the former if Donald Trump’s tweets are to be taken at face value; the leader of the world’s largest economy seems to be shutting shop with a banner that reads ‘America First’? Or, maybe not?
Some would say, a reconciliatory Trump was quick to point out that America’s economy, thanks to him, was booming and that even according to the IMF, his tax cuts will likely supercharge the American economy – even if that boost is a transient one. And a booming America is great for the global economy with both China and India growing in excess of 6%.
Even China with its Belt and Road initiative, a global, $1 trillion initative designed to bolster infrastructure investment across more than 60 countries, should play nicely into South Africa’s quest to re-ignite its economy following years of sub-par economic growth and a failure to capitalise on the last commodity boom.
So, despite the unwinding of QE in the developed world and the prospect of higher interest rates, the developed world remains in a low yielding environment.
In their search for yield, developed market investors with favourable global tail winds from the US and China, continue to eye emerging markets.
South Africa is lining up to make sure that this time it does not miss out. What better place to start than a rejuvenated political leadership credibly engaging world business on the global stage at Davos.