South Africa is trending downwards

Fitch downgrades SA outlook

Jan 13 2012  Reuters .

Johannesburg – Fitch cut South Africa’s rating outlook to negative from stable on Friday, saying it had seen limited progress on several long-standing structural issues that have over time caused the country’s economic performance to fall behind its peers.

The rand fell 1.5% against the dollar after the move, while South Africa’s 5-year credit default swaps rose 10 basis points.

Fitch, which has a BBB+ rating on South Africa, said the country’s inability to create jobs, with an unemployment rate of around 25%, was putting pressure on growth and narrowing the tax base.

The ratings agency said the country’s external finances, though still better than its peers, were deteriorating and a failure to accelerate growth would weaken the country’s credit fundamentals.

Mixed reaction

Most SA economists and Gov officials tried to down play the move, saying it was because of “ heightened sensitivity”, others confirmed the downgrade was justified

There are pockets of wealth and good governance in SA, but the overall long term fundamentals are negative

• Falling employment and tax revenues
• Declining education and infrastructure
• Corruption, nepotism and factionalism
• Weakened productivity, lower efficiency

These, and other factors will reduce the value of any assets held in South Africa or denominated in SA rands

Globally, SA now offers higher reward with higher risk. Logically, it might be time to place a portion of your wealth in a less risky (and less rewarding) environment.

Its not about “Wealth Creation” anymore, its about “Wealth Preservation”

The conclusion is “Get Your Wealth to Safe Haven”

Invest in tried and tested residential property, in a safe country with good fundamentals and long term growth… Australia