Let’s start off with the declaimer – I’m South African and I might just be bias. If you would ask me to buy one #ETF and one ONLY, this will be my recovery . Is it still a country full of challenges? YES! Could it face further downgrades? MAYBE! Do South Africa know how to fix the problem and have the “management” to do it? YES!
Fundamentally, according to Thomson Reuters consensus forecasts, analysts see growth of 17.1% from current levels on the FTSE/JSE Top40 Index (in locally currency). My personal view is that the Rand/USD should be better priced around the R12.78/USD over the next 12 months. Should that happen, we could be looking at a possible capital gain of 8.32% (in USD) on the $EZA, corresponding nicely with the close to $58.40 levels. Should the $ZAR only improve to R13.50/USD (and consensus are spot-on), then we could be looking at a target price of $60.85 over the next 12 months.
On the downside, watch $53.08 as first resistance point, with $51.50 as next possible stop.