Capitec and SA Inc. ride the wave of GNU investor optimism
South Africa has seen a surge of investor confidence and Capitec chief executive Gerrie Fourie says things are improving for the better.
Talking at a media briefing last week, Fourie said: “What has happened in South Africa in the last six months has been overall very positive. The coalition government has been very impactful. We’ve seen changes taking place.
“One can definitely see that the CEO initiative between the private sector and the government is starting to bear fruit and a lot of initiatives are taking place. Overall the economy should be in a much better place than it’s been for quite a long period,” he said.
Fourie reflected on how during the Covid-19 pandemic many central banks printed money globally, which led to high inflation and a lot of economies landing in a semi-recession. The thing that hurt South Africans was food inflation and then petrol prices, he said.
But inflation was starting to moderate, globally and locally.
“If we can get everyone, including ministers and the private sector in South Africa, to have one objective, growth, we can turn the country around and make it a lovely place,” Fourie said.
He made these remarks after Business Report asked if the GNU was aiding JSE-listed Capitec’s share price, which has gained 26.06% in the past three months alone. This as its shares have grown by a whopping 163% in the past five years. The share rose 1.37% to close at R2,888 on Friday.
Capitec is not the only counter benefiting from the GNU investor positivity after South Africa held elections earlier this year and had a change in government.
For the past month, the JSE has been in bullish territory and in the green, racking up record closes on the back of renewed business and investment confidence in South Africa.
Investor risk-off sentiment towards South Africa, which has seen billions of rands leave the country’s shores, has abated. The country is back on global investor’s radars in the emerging market basket.
It also surged on data showing the US will likely avoid going into a recession. Federal Reserve Chairman Jerome Powell gave clear signals that the central bank will cut its interest rate in the September meeting during his speech at the Jackson Hole Economic Symposium, according to Trading Economics.
The JSE All Share Index on Friday closed at 84,351.57 points, up 0.87%.
The rand also strengthened during the week, going below the key R18 to the dollar. On Friday at 7.30pm, it hit R17.71 against the dollar.
Last week, President Cyril Ramaphosa, in his Monday newsletter, hailed the growing confidence among investors about the prospects for South Africa’s economy on the implementation of structural reforms.
Ramaphosa said business confidence was so important to the government’s efforts to create jobs because it signalled an improved business environment, and encouraged new investment.
And following a meeting between Ramaphosa, ministers, and business leaders as part of B4SA this month, Trade, Industry, and Competition Minister Parks Tau said the government had set itself the target of economic growth of between 3% and 5% by 2030, on the back of ample power supply.
Gross domestic product was expected to reach 1.6% from the end of this year through to 2026, according to the National Treasury’s February estimates.
Anchor Capital chief executive Peter Armitage told Business Report recently that confidence levels have changed dramatically over recent months, and this was reflected in a stronger rand, lower bond yields and a surge in share prices.
“The government has made a lot of right moves and business is following on enthusiastically. The key is allowing the private market the economic freedom and framework to deploy capital – of both the human and financial kind,” he said.
“However, we are in something of a honeymoon phase and SA is being given the benefit of the doubt by the financial markets. The Government of National Unity now has to deliver on a sustained basis,” he said.
BUSINESS REPORT