Goldman Sachs increasingly optimistic about SA

[f2wohf]

Johannesburg - Goldman Sachs Group could raise its already positive outlook for South Africa’s Gross Domestic Product (GDP) growth in 2018.

The investment bank said in a research report on Thursday that while market participants welcomed the recent change in political leadership, they have been concerned about the implementation of the promised structural reforms and the market has not yet priced them in.

Goldman Sachs in January called SA “the big emerging market story of 2018” and predicted economic growth of 2.4%, higher than Treasury’s and the International Monterrey Fund’s forecast of 1.5% and the World Bank of 1.4%.

In Thursday’s report titled Economic Analysis of Cyril Ramaphosa’s ‘New Deal’ for South Africa it expects the “risks tilted to the upside”.

Goldman economist Andrew Matheny said that four key areas warrant monitoring for indications of reform progress in the coming months; the mining sector, land reform, state owned enterprise (SOE) policy, especially Eskom and public sector negotiations

“The key test, in our view, will be if the ‘New Deal’ policies that are more structural and fundamental are enacted, now that market pressure has decreased”.

Mining sector

Minister of Mineral Resources Gwede Mantashe has committed to concluding negotiations for Mining Charter III by the end of May.

“This is likely to specify targets for black ownership, lay out a clear framework for licencing and taxation, and resolve policy uncertainty”, writes Matheny.

However he warned “that clarification of the mining charter is unlikely on its own to resolve uncertainties entirely” and legal uncertainties could continue to be challenged in court

Mantashe recently announced that the department of mineral resources will appeal the ‘once empowered , always empowered’ declaratory order by the High Court, which will see allow mining companies to only ensure they have a 26% black stake once off once and if the black shareholders choose to sell, the mining firm is absolved of further responsibility.

Land reform

Goldman Sachs says if land reform is “addressed pragmatically and in ways that work to dismantle the negative spatial legacies of apartheid”, it could contribute positively to economic activity.

A message which Ramaphosa has been stressing when faced by questions from international investors and local business.

“The public debate around land-related issues also largely centres on agricultural land, while in the view of many experts the most pressing policy challenges are in urban areas”, Matheny commented.

The bank expects the Ramaphosa administration will clarify the conditions under which it foresees pursuing land expropriations.

The joint constitutional review committee will undertake submissions and public hear8ings before reporting back to parliaments on possible changes to land ownership, mid-September.

Parastatal policy

According to Goldman Sachs government’s backing of SOE loans represent the “greatest threat” to South Africa’s fiscal position

“Eskom faces cost pressures, a revenue shortfall, short-term liquidity needs and longer-term solvency concerns. With debt (including government guarantees) amounting to 8 to 9% of GDP, this clearly raises fiscal concerns”, writes Matheny.

Goldman Sachs expects some degree of asset unbundling and private sector participation in Eskom and other SOE’s in the future with announcements to this effect in the next few months.

Public wage negotiations

The public sector wage negotiations which have dragging on for over seven months are being seen by Goldman Sachs as “the most challenging issue in the current pipeline” in SA.

The New York headquartered bank believes that the market has already priced in an increase announced in the February budget speech of around 2%, approximately two percentage points higher than inflation.

“If this outcome transpires, on many counts from a fiscal perspective it would be somewhat disappointing”.

Goldman Sachs says that the issue is important because the public wage bill is the single largest expenditure item and can be seen as bloated considering the above inflation increases in recent years

The issue is also symbolic as Ramaphosa is supported by the largest union federation, the Congress of South African Trade Unions and the way that the government remunerations is handled is being seen as a litmus test for his “ability and willingness to undertake difficult structural reforms”.

Meanwhile, on the day that the Goldman Sachs’ positive report was released, data by Statics South Africa showed that key industries, mining and manufacturing contracted in the first quarter of 2018, which does not bode well for GDP growth in the first three months of the year.

https://www.fin24.com/Economy/goldman-sachs-increasingly-optimistic-about-sa-20180511

 

[Jet-Fighter7700]

thats good, at least our credit rating will go up at some point,

as long as Malema and friends don't ruin it with their comments.

 

[NarrowBandFtw]

Goldman Sachs says if land reform is “addressed pragmatically

That's a pretty humongous "IF", when has any country ever done land reform "pragmatically"? The recent land invasions in places where there never could be a valid land claim e.g. Hermanus is proof of what is to come.

 

[f2wohf]

That's a pretty humongous "IF", when has any country ever done land reform "pragmatically"? The recent land invasions in places where there never could be a valid land claim e.g. Hermanus is proof of what is to come.

Did they succeed?

If not, it is then addressed pragmatically and in the spirit of the law (for now).

 

[McSack]

The same Goldman Sachs who admitted to defrauding thousands of investors leading up to the 2007/2008 financial crisis
Good bunch of okes to base ones opinions on I guess

Excerpt from the findings back in 2016

“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” said Acting Associate Attorney General Stuart F. Delery in a statement.

 

[f2wohf]

The same Goldman Sachs who admitted to defrauding thousands of investors leading up to the 2007/2008 financial crisis
Good bunch of okes to base ones opinions on I guess

Excerpt from the findings back in 2016

You do know that not everything is black or white in life, and that this would be a different department with a different team in a different country?

 

[NarrowBandFtw]

Did they succeed?

Have they been stopped entirely?

If not, it is then addressed pragmatically and in the spirit of the law (for now).

Well no, seeing as it has not changed at all yet, the commi-ty still has to determine whether or not to Marx up our constitution on that front in August. What we've had to date has been fairly pragmatic, though we are virtually guaranteed that what is to come will be more aggressive than that.

 

[paul5186]

I heard the annual land reform budget is smaller than the protection of ministers budget on the radio. The ANC only has itself to blame.

 

[Former member 61586]

Land reform has had 24 years to be addressed. It didn't work. Not because evil whites didn't want to sell their land. Because of government corruption and incompetence. Now they are getting desperate and want to steal land and call it land reform. I do not see any way that can be "pragmatic". Have the imbeciles at Goldman Sachs done zero research before making such asinine "analysis"?

 

[McSack]

You do know that not everything is black or white in life, and that this would be a different department with a different team in a different country?

Who gives a fsk...it is still Goldman Sachs
...but you are welcome to base your opinions on those of a lying bunch'a thieves if you like
Seems most thinking investors wouldn't though

Goldman Sachs is 2017's worst-selling fund manager with $27 billion in outflows: FT
Investors have pulled an estimated $26.7 billion from Goldman Sachs Asset Management’s mutual funds so far in 2017, according to Morningstar data, the Financial Times reported Sunday, making Goldman the world’s worst-selling fund manager globally.

 

[f2wohf]

Have they been stopped entirely?


Well no, seeing as it has not changed at all yet, the commi-ty still has to determine whether or not to Marx up our constitution on that front in August. What we've had to date has been fairly pragmatic, though we are virtually guaranteed that what is to come will be more aggressive than that.

The ones who did have been stopped. You can’t arrest other people preventively for maybe having the thought of doing something illegal.

Hence why I said «*for now*».

 

[McSack]

Land reform has had 24 years to be addressed. It didn't work. Not because evil whites didn't want to sell their land. Because of government corruption and incompetence. Now they are getting desperate and want to steal land and call it land reform. I do not see any way that can be "pragmatic". Have the imbeciles at Goldman Sachs done zero research before making such asinine "analysis"?

....they probably have an SA Mortgage Bond product launching soon knowing those fskers

 

[Former member 61586]

....they probably have an SA Mortgage Bond product launching soon knowing those fskers

Actually you may be onto something there. I would not put it past them. This is a company that will happily screw millions out of their life savings and then spend the money the government gives them to bail them out on a new jet and a company break-away in the Bahamas.

 

[f2wohf]

Who gives a fsk...it is still Goldman Sachs
...but you are welcome to base your opinions on those of a lying bunch'a thieves if you like
Seems most thinking investors wouldn't though

They remain one of the world's largest CIB banks and must satisfy their clients somehow.

Fund management is a small part of GS's activities. Here's how they actually do https://www.cnbc.com/2018/01/17/goldman-sachs-posts-eps-of-5-point-60-vs-est-of-4-point-91.html

Find me one bank who hasn't been a lying bunch of thieves at some point in history, good luck. Yet sometimes (actually most), investors base their investments on banks' analysts.

 

[McSack]

They remain one of the world's largest CIB banks and must satisfy their clients somehow.

Fund management is a small part of GS's activities. Here's how they actually do https://www.cnbc.com/2018/01/17/goldman-sachs-posts-eps-of-5-point-60-vs-est-of-4-point-91.html

Find me one bank who hasn't been a lying bunch of thieves at some point in history, good luck. Yet sometimes (actually most), investors base their investments on banks' analysts.

you are right ...there probably isn't one, but GM sits pretty much right on top of that pile