Rudolph
09-15-2008, 03:35 AM
SA better than Russia - Moody's (http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-1786_2392575)
Sep 12 2008 4:08PM
Johannesburg - South Africa's financial markets are considered more robust and its business conditions more favourable than Russia's, according to Moody's Economy.com.
The analysts say that a key reason that South Africa's equities have been hit by a much smaller margin than Russia's is the different makeup of the two countries' markets, especially with regard to their important resource sectors.
"So far this month, the Russian stock market has dropped 20%, while equity prices in South Africa have lost about 6%. While energy companies dominate the Russian market, precious metals are the bread and butter of South African mining. Notably, with oil prices trending downward, the lure of energy companies has faded somewhat.
"Prices of precious metals do, of course, also fluctuate, but to a somewhat lesser extent. This is especially true with regard to gold, which is considered a haven in times of upheaval, such as the global financial system is experiencing now," the analysts said in their weekly commentary on Friday.
"South Africa's mining sector nevertheless remains under pressure. Mining contracted 9% m/m and 13% in annual terms in July. Electricity shortages dampened production in the first half of the year, and maintenance work is behind the poor performance reported in July.
Lower input costs in coming months should ease the pressure, but mining is unlikely to be impressive this year," they added.
"Importantly, South Africa's financial markets are also deemed more robust that those of Russia. A survey of the world's financial markets by the World Economic Forum published earlier this week ranks South Africa 25th out of 52; Russia is 36th. Uncertainty regarding the stability of financial markets ultimately increases risk aversion toward a country and raises the possibility of a sharp outflow of money.
"The business climate in South Africa is also considered somewhat more favourable. Even though domestic business confidence in South Africa hit a seven-year low in the third quarter, outside observers are more optimistic regarding the country's prospects.
The Doing Business 2009 report by the World Bank and International Financial Corporation, also out this week, places South Africa in 32nd place out of 181 countries, just below France and well above Russia at number 120.
"Government interference in Russia, particularly in the important energy sector, is understandably an important deterrent to foreign investors," Moody's Economy.com said.
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I know I'm risking my life posting this... ;) Stupid, misleading title aside, shows you how weird life can be. Size of one's economy for one is no indication of stability or equality. I'm not sure what all this stability is that the article refers to, who the hell overseas thinks that investing billions here is a safe long-term bet? That has yet to be proven. I love this country, but God, we're in trouble, and any brief analysis will prove that.
Sep 12 2008 4:08PM
Johannesburg - South Africa's financial markets are considered more robust and its business conditions more favourable than Russia's, according to Moody's Economy.com.
The analysts say that a key reason that South Africa's equities have been hit by a much smaller margin than Russia's is the different makeup of the two countries' markets, especially with regard to their important resource sectors.
"So far this month, the Russian stock market has dropped 20%, while equity prices in South Africa have lost about 6%. While energy companies dominate the Russian market, precious metals are the bread and butter of South African mining. Notably, with oil prices trending downward, the lure of energy companies has faded somewhat.
"Prices of precious metals do, of course, also fluctuate, but to a somewhat lesser extent. This is especially true with regard to gold, which is considered a haven in times of upheaval, such as the global financial system is experiencing now," the analysts said in their weekly commentary on Friday.
"South Africa's mining sector nevertheless remains under pressure. Mining contracted 9% m/m and 13% in annual terms in July. Electricity shortages dampened production in the first half of the year, and maintenance work is behind the poor performance reported in July.
Lower input costs in coming months should ease the pressure, but mining is unlikely to be impressive this year," they added.
"Importantly, South Africa's financial markets are also deemed more robust that those of Russia. A survey of the world's financial markets by the World Economic Forum published earlier this week ranks South Africa 25th out of 52; Russia is 36th. Uncertainty regarding the stability of financial markets ultimately increases risk aversion toward a country and raises the possibility of a sharp outflow of money.
"The business climate in South Africa is also considered somewhat more favourable. Even though domestic business confidence in South Africa hit a seven-year low in the third quarter, outside observers are more optimistic regarding the country's prospects.
The Doing Business 2009 report by the World Bank and International Financial Corporation, also out this week, places South Africa in 32nd place out of 181 countries, just below France and well above Russia at number 120.
"Government interference in Russia, particularly in the important energy sector, is understandably an important deterrent to foreign investors," Moody's Economy.com said.
---
I know I'm risking my life posting this... ;) Stupid, misleading title aside, shows you how weird life can be. Size of one's economy for one is no indication of stability or equality. I'm not sure what all this stability is that the article refers to, who the hell overseas thinks that investing billions here is a safe long-term bet? That has yet to be proven. I love this country, but God, we're in trouble, and any brief analysis will prove that.