UBS Wealth Has Good Things to Say About EM, Not South Africa

JOHANNESBURG (Capital Markets in Africa) – There’s one emerging market country that Michael Bolliger can’t get bullish about at the moment: South Africa.

President Jacob Zuma is fighting to stay out of court before the African National Congress votes for a new leader in December. He’s pushing for his ex-wife to succeed him, but most analysts in a Bloomberg survey think the nation’s Deputy President Cyril Ramaphosa probably will. It’s more noise for a market that has already paid a price for political wrangling when it lost two of its investment ratings in April.

“Political decisions typically don’t play a major role in our investment decisions, but in South Africa’s case, it’s an exception due to the very binary nature of the outcome,” Bolliger, who oversees more than $2 trillion for clients as the head of emerging-market asset allocation at UBS Wealth Management, said in an interview in Bloomberg’s office in Dubai.

The rand, which was one of the world’s best performing currencies for most of the first quarter, isn’t among emerging nations’ top 10 gainers this year.

Aside from South Africa, Bolliger is bullish on developing equities, even after companies handed investors gains of about 20 percent in the second quarter of 2017 on a yearly basis, compared to about 12 percent for those based in the U.S. The MSCI Emerging Markets Index has advanced almost 30 percent in 2017, boosting the gauge’s price-to-earnings ratio over the next 12 months to the highest level since January 2010.