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<\/a><\/p>\nRenaissance Capital, which has correctly predicted eight out of nine sovereign rating decisions in emerging Europe and the Middle East since May, is calling a downgrade to junk for South Africa next month.<\/p>\n
That view is at odds with the majority in the Bloomberg survey, but Renaissance Global Chief Economist Charles Robertson says South Africa\u2019s fundamentals have deteriorated significantly since May, when Moody\u2019s Investors Service affirmed its Baa3 rating. The next review is on 1 November.<\/p>\n
“The macro numbers are not supportive of South African keeping investment grade,” Robertson said. “Poor growth, tough public finances, a subdued commodity outlook, tension on the streets as seen in the anti-Nigerian riots, questions about the president\u2019s ability to push through his agenda – all these are worrisome.”<\/p>\n
President Cyril Ramaphosa\u2019s ability to implement tough economic reforms is constrained by his tenuous hold on the deeply divided ruling African National Congress and opposition from its labour union and Communist Part allies, who oppose privatization, fearing job losses.<\/p>\n
The slow pace of action has frustrated investors, driven business confidence to the lowest level since 1985 and weighed on the rand.<\/p>\n
Since May, Robertson and his team correctly called rating decisions for Turkey, Pakistan, Abu Dhabi, Qatar, the Czech Republic, Russia, Hungary and Poland. Its prediction for Saudi Arabia was incorrect.<\/p>\n
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