SA tipped by US bank giant

Johannesburg - South Africa is a favourite investment destination among emerging markets, largely on account of its good exposure to resources, steady real growth in remuneration and the expenditure relating to the 2010 World Cup soccer tournament.

That's according to a Bank of America Merrill Lynch report. Other popular choices on its investment list are China, Brazil and Russia.

Foreigners have been warming to SA shares in recent months. Net foreign purchases on the JSE in 2009 totalled R75bn - the highest figure yet for any single year. That compares with 2008's net outflow of R54bn.

The popularity of South African shares in 2009 was part of an extensive global trend favouring emerging markets, Stanlib economist Kevin Lings says in a report.

Share prices in emerging markets climbed by 73% last year. In the same period, the local share market increased by 28.3%, and the rand is 27.2% firmer than it was at the beginning of 2009.

Merrill Lynch says emerging countries showed the best recovery in 2009.

The strength and stability of banks (with low gearing ratios and clean balance sheets) in virtually all the emerging markets was an important reason for these countries performing better than markets in developed countries in 2009. The past nine years are described as "the decade of emerging markets".

An investor who invested $100 in emerging markets in 1999 would have $262 today. On the other hand, an investor who made the same investment in the US index of the biggest 500 listed companies (the S&P 500) would have had only $91 now.

Colombia was the emerging market that fared the best in the past decade. South Africa is in twelfth position.

- Sake24.com

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