Global investment house Lehman Brothers said on Friday morning that while they remained concerned about the long-term outlook for South Africa and its markets, things were okay for now.
Commenting on Thursday’s views on oil by central bank governor Tito Mboweni they added that they would argue that the recovery of the rand since the last Monetary Policy Committee (MPC) meeting was at least as positive.
“Tito Mboweni, the central bank governor, commented that falling crude oil prices were positive for the inflation outlook, but that one could not rely on the lower price level being sustained. We would also argue that the recovery in the rand since the last MPC meeting will be at least as positive, if sustained,” said Lehman’s emerging markets analyst Rob Beange.
“Although we have concerns about the long-term outlook of South Africa and its markets, we argued following the MPC that markets were sufficiently bearish and that the data would likely improve during the fourth quarter. We retain that view,” he stated.
Beange also commented that Thursday’s vehicle sales data in South Africa were not what they seemed at first blush.
“New vehicle sales rose by 14,1% year-on-year (y/y) in October, up from 5,6% y/y in September. Although the headline growth rate accelerated this reflected base effects. There does seem to some evidence that the level of car sales has stabilised,” concluded Beange. – I-Net Bridge