Benefiting from an SA downgrade

Basil959

Basil959

Well-Known Member
Joined
May 20, 2011
Messages
325
Reaction score
6
As the next review looms and the country seems more politically unstable than it's been since the 90's.. Is there an investment one could look at to possibly secure funds or benefit?

I was think along the lines of JSE listed companies who are heavy exporters?
 
Pilgrim said:
I wonder what would happen to bitcoin prices, might go up a bit when the rand tanks
Click to expand...

I highly doubt it will affect BTC price at all. SA is less than 2% of world GDP so it is nothing really.
 
Basil959 said:
As the next review looms and the country seems more politically unstable than it's been since the 90's.. Is there an investment one could look at to possibly secure funds or benefit?

I was think along the lines of JSE listed companies who are heavy exporters?
Click to expand...

The TOP 40 companies derive 60% of their income from outside of SA, from what the commentators on Moneyweb and Justonelap say. I saw an infographic somewhere showing all the details. No idea where it was now.

DBX trackers (DBXWD and DBXUS) on the JSE would also be a good thing to look at. Mine have gone up quite a few percent since start of August.
 
I'm thinking, equal splits...

AB Indev or should I look at SABMILLER
Naspers
British American Tobaco
Richmont
 
BAT with the current corruption and espionage skeletons being forced out the closet?
 
Rand can plummet as far is it can, my EU and Pounds will be worth a mint. Cheap holidays in SA for me thanks SA government you doing well.
 
smi said:
Rand can plummet as far is it can, my EU and Pounds will be worth a mint. Cheap holidays in SA for me thanks SA government you doing well.
Click to expand...

Go away!

you make me feel k@k for not earning in pounds yet
 
I am out for this ride ahead of any potential downgrade. I sold off all my shares and investments I had on the JSE. I am looking at two possible scenarios.

The first scenario is that the ANC is capable to growing the economy again after the downgrade. In this event, I am waiting for the downgrade to happen and will then watch the market for 6 months and will then push everything I have back into the market. Here is what happened in Brazil when they were downgraded. Upon the downgrade, the markets fell and shortly thereafter recovered, only to go into a death spiral about 2 months later when the real effects hit the country. They recovered brilliantly this far.

By the way, when the stockmarket fell in Brazil, not a single share did good. No hedging worked, everything collapsed.

image.png

The second scenario is that the ANC will not be able to grow the economy again. Unfortunately, this is my opinion. I doubt the current government would be able to recover. I believe that there is a strong possibility that SA will simply go the Zim route.
 
Last edited:
Albert Broco said:
I am out for this ride ahead of any potential downgrade. I sold off all my shares and investments I had on the JSE.
Click to expand...

Why liquid already? Why not just update your stop-losses on a weekly basis and score maximum out of the downgrade?
 
You're not going to hedge against country's decline by buying shares listed in that country in that country's currency. Doesn't work that way regardless of what share you pick...

Sure the ones with significant overseas operation will suffer less but thats about it.

To really hedge this kark you need something denominated in a foreign currency. BTC would work but I'd really not want significant amounts of wealth stored in there. :erm:

To actively benefit from the downgrade (as opposed to just maintaining your wealth) you'd need to actively bet against the ZAR with derivatives.
 
Hamster said:
Why liquid already? Why not just update your stop-losses on a weekly basis and score maximum out of the downgrade?
Click to expand...

The risk is too big for me at this point in time. While foreign investors are withdrawing their investments, the chances of making real money is minuscule. The safest for me was to clean out and wait for the s**tstorm to brew and play out. I will see what my options are after December.

If there are any chance for the ANC to recover the economy, real money will only be made after a huge collapse in the JSE. The upcoming collapse will not be small and this was evident in Brazil's stockmarket, which was even bigger and stronger than the JSE. Those who have money invested in any stocks, no matter what stocks, will lose a lot of money.

For now my money is safer in my bank account.
 
HavocXphere said:
You're not going to hedge against country's decline by buying shares listed in that country in that country's currency. Doesn't work that way regardless of what share you pick...

Sure the ones with significant overseas operation will suffer less but thats about it.
Click to expand...

The problem with a possible upcoming junk rating, same as with Brazil, no matter which international country is listed on your exchange, they all suffer. International investors sell off everything. Closer to the time of the announcement and a month or so afterwards, all share prices plummet. A large number of smaller companies may be delisted shortly afterward, while larger companies may still recover again.

My problem is, will the current ANC be able to recover the economy again? Brazil recovered quickly, but we are not Brazil. This is my problem at this point in time. Leaving my money in any stock is not an option at this point in time.

If you really want to take advantage and still make money, you need to go offshore. You will get burnt keeping your money locally and hoping for a quick recover.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X