A major easing of foreign-exchange controls presents South African money managers with the dilemma of whether or not to move more money offshore.
An amendment to prudential rules announced in last month’s budget enables pension and mutual funds to invest 45% of their assets abroad, up from 30% previously.
A lot of investment houses are grappling with how do we adjust our asset allocation,” Odendaal said in an interview. You can think much more of South Africa as a regional portion of your portfolio, rather than the core of your portfolio. We’re still thinking this through. We haven’t made any decisions yet.”Pension and savings funds oversee a total of R2.96 trillion in the country, according to the Association of Savings and Investment South Africa.
“This does reshape the whole emerging-market investment landscape,” Odendaal said. “And within that context, South Africa isn’t looking so bad.”“The rand doesn’t look particularly cheap or expensive. It’s only when it’s cheap or expensive that you want to make a big call. It’s going to be hard to foresee a scenario that’s going to cause it to strengthen dramatically from here. But for it to weaken, you’re going to need something like another EM crisis.
“We’ve been bullish on bonds for a long time, and we think that the latest spikes should make you even more bullish.”Commodities prices are seen pulling back at some point and Old Mutual sees the need to be more cautious about investing in resources stocks.
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