South Africa is a standout among its global peers offering an unexpected advantage: affordability. That\u2019s according to brokerage RMB Morgan Stanley.<\/p>\n\n\n\n
The rand has weakened about 9% versus the dollar and euro and some 12% against the British pound over the last year. <\/p>\n\n\n\n
The depreciation, along with fairly subdued inflation in South Africa compared with abroad, means that relative prices for local goods and services on sale are cheaper than elsewhere.<\/p>\n\n\n\n
\u201cConsumers can drink nearly three cappuccinos in South Africa for the price of one in the US and could spend four nights in a Cape Town hotel for the price of only one in London,\u201d said Mary Curtis, a strategist at the broker, and Andrea Masia, an economist.<\/p>\n\n\n\n
\u201cLooking at the bigger picture, low relative prices of South African goods and services are just another example of value in South Africa assets,\u201d they wrote in a note to clients.<\/p>\n\n\n\n
Valuations for both bonds and equities look cheap compared with peers, with elections due later in the year potentially providing a fresh catalyst to unlock some value, they said.<\/p>\n\n\n\n
Meanwhile, price disparities support the continued recovery in South Africa\u2019s net tourist receipts, while the weaker currency should result in lower import growth, they said. <\/p>\n\n\n\n
Both would help offset the slide in export prices and limit the potential deterioration in the current account.<\/p>\n\n\n\n