THE SOUTH AFRICAN ECONOMY WILL CONTINUE TO GROW AT A RATE OF 5% DESPITE THE DROP IN THE VALUE OF THE RAND SINCE FEBRUARY, SAID BRYAN CANTOR, AN ECONOMIST AT THE UNIVERSITY OF CAPETOWN AND A CONSULTANT FOR THE INVESTMENT FIRM OF SMITH BARNEY.
“THE IMPACT OF THE WEAKER RAND IS NOT ALL BAD,” HE SAID. ALTHOUGH THE INFLATION RATE IS LIKELY TO RISE FROM ABOUT 6% TO 10%, “SOUTH AFRICAN INDUSTRY AND MINING, WHICH HAD BEEN SQUEEZED BY THE STRONG RAND, WILL HAVE RELIEF” BECAUSE THEIR MAIN SOURCES OF REVENUE ARE THE U.S. DOLLAR AND OTHER INTERNATIONAL CURRENCIES.
INDUSTRIES THAT COMPETE DIRECTLY WITH IMPORTS WILL BENEFIT AS THE WEAKENED RAND DRIVES UP THE PRICES OF THEIR FOREIGN COMPETITORS, ALLOWING THEM TO INCREASE THEIR MARKET SHARE OR RAISE THEIR OWN PRICES, HE ADDED.
DR. CANTOR SPOKE AT A DISCUSSION OF THE SOUTH AFRICAN STOCK MARKET PRESENTED BY THE SOUTH AFRICAN BUSINESS ASSOCIATION IN CONJUNCTION WITH THE AFRICAN TRADE CENTER OF THE DEKALB CHAMBER OF COMMERCE.
IN THE PRESENT ECONOMIC ENVIRONMENT, HE TOLD ATTENDEES, MANUFACTURING, COMPUTERS, CHEMICALS AND ELECTRONICS ARE ALL GOOD FOREIGN INVESTMENT OPPORTUNITIES.
HIS COLLEAGUE MARTIN FELDMAN, AN ANALYST AT SMITH BARNEY, NAMED BARLOW LIMITED, SOUTH AFRICAN BREWERIES, NAMPAK LIMITED, SASOL LIMITED AND MALBAK LIMITED AS SOUTH AFRICAN COMPANIES THAT HE EXPECTED TO SHOW INCREASED EQUITY PRICES GIVEN THE CURRENT ECONOMIC SITUATION.
DR. CANTOR BLAMED THE DROP IN THE RAND ON HIGH INTEREST RATES IN THE U.S. AND OTHER COUNTRIES, WHICH DECREASED THE VALUE OF THE SOUTH AFRICAN BOND MARKET AND DROVE THE RAND DOWN.
FOR MORE INFORMATION CALL CHELLE IZZI OF THE DEKALB CHAMBER OF COMMERCE AT (404) 378-8000.
BY BRIANA PEHLMAN