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Johannesburg - International investors seem to be getting a bit more positive on South African equities, but locals are overly pessimistic on growth, according to an economist on SA from Nomura International, Peter Attard Montalto.
Montalto told I-Net Bridge in an exclusive interview on Tuesday in Johannesburg that Nomura had gone overweight South Africa and also emerging markets.
Montalto says his SA economic growth forecast is a positive 0.9% this year compared
with some other forecasts of around 0.2%.
He explains that this view ties in with Nomura's China view, based on top
research from within the bank.
"We are the most bullish investment house on China and see 8% growth," he says.
He calls the local government drive in China "ginormous" and feels many analysts overlook this element.
Montalto says that Nomura is hence bullish on base metals (and also precious metals), but bearish on the dollar and pound.
"Basically, we are bearish on anyone printing money," he says.
Montalto says that Nomura sees short-term weakness in the rand going into the election on April 22, it should then come back into the end of the year and into the World Cup at about nine to the dollar (from a current 9.45 to the dollar).
But he then sees it weakening from there, but with views reinforced by what ANC policy turns out to be.
Montalto feels that the World Cup will add an extra 0.4% to SA's GDP next year based on the extra consumption.
Montalto highlights three key risks for SA going forward as the election: detail on actual policy; "sticky" inflation -
especially around the 6% mark; and the current account deficit.
Nomura International is the UK-based subsidiary of Japan's Nomura Holdings, which bought Lehman Brothers' investment banking and equities unit in Asia and Europe and kept on most of its employees.
Montalto - who is one of the employees retained - says that Nomura's staff complement went from 18 000 to 26 000 in a month.
US investment bank Lehman Brothers declared bankruptcy in 2008 - the largest in US history. In 2008 Lehman faced an unprecedented loss to the continuing subprime mortgage crisis. The US government did not announce any plans to assist with any possible financial crisis that emerged at Lehman.
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I-Net Bridge