S&P affirms SA's resilience to global shocks

Since the beginning of 2008 the entire world has been characterised by bad news: Financial crises, particularly in the US, higher-than-ever oil prices, high interest rates, inflation and lately the price of basic foods spiraling out of control.

The nature of media reporting is that bad news is newsworthy and often good news is overshadowed by sensationalism focusing on tragedy and misfortune.

While taking cognisance of world events, Silke Financial Services keeps abreast of the positive things happening in our world. We recently came across an article which appeared in SA Good News, which augurs well for the South African economy.

The highly respected rating agency Standard & Poor's affirmed that their outlook for South Africa is stable and that the country should be able to weather the global economic turbulence. According to Standard & Poor's credit analyst Remy Salters: "Global market turbulence has contributed to a marked depreciation in the rand since early 2008. We expect portfolio inflows to remain weak in the short term. Combined with a current account deficit expected at 21% of current account receipts, this should result in further rand depreciation in 2008."

On the positive side, however, South Africa's build-up of foreign reserves and solid fiscal-monetary policy coordination over the past few years will keep South Africa in good stead amid the heightened external turbulence, said the agency.

"Although the general election in mid-2009 could affect budgetary outturns on the margin from 2010 onward, we do not expect political transition to result in a major shift in the fiscal-monetary policy mix," added Salters.

Source: SA Good News Website

Some of our clients have been concerned about the underperformance of certain value-oriented funds. In fact, we should take comfort in the fact that the stocks they are holding and also buying are showing extremely low valuations at present and will pay handsomely once the market realises these bargain prices. Patience will be rewarded.

Silke Financial Services is highly skilled in guiding you to take advantage of market opportunities through turbulent times.

If you have any queries regarding the above commentary please contact us on 021 683 3380 or info@silke.co.za.