Documente Academic
Documente Profesional
Documente Cultură
n President Ramaphosa has prepared an economic policy platform that he calls a Andrew Matheny
+44(20)7051-6069 |
‘New Deal’ for South Africa, designed to correct policy missteps and leadership andrew.matheny@gs.com
Goldman Sachs International
failures of the past decade, reverse the deterioration of institutions, and support
business and consumer confidence. Its priorities include boosting private
investment by removing policy uncertainty, restoring fiscal discipline and
financial health to SOEs, and combating corruption and ‘state capture’.
n Our interpretation of these policy proposals is that they are intended to: a) boost
For the exclusive use of MATTHEW.NEWTON@GS.COM
confidence in the short term; b) support growth in the medium term; and c)
address underlying structural issues in the longer term. In our assessment, the
programme does not represent a significant philosophical departure from stated
objectives in the existing National Development Plan (NDP). That said, while it
envisages incremental rather than radical policy change, Mr. Ramaphosa’s focus
on economic stewardship and reform does appear to mark a political inflection
point for South Africa.
n While market participants have welcomed the recent change of leadership, as
reflected in the strengthening of the Rand, they remain collectively somewhat
cautious on prospects for implementation of reforms, given potential pressure
from vested interests, political risks and the magnitude of social and economic
challenges. Thus, the market does not yet appear to be pricing in meaningful
structural reforms and we see scope for a significant further re-rating higher of
growth expectations (our own growth forecast for 2018 stands above consensus
at 2.4%, with risks tilted to the upside).
n Four key areas warrant monitoring for indications of reform progress in the
coming months: 1) the mining sector; 2) land reform; 3) SOE policy, in particular
with respect to Eskom; and 4) public wage negotiations. We expect greater
clarity on 1) and 2), and the announcement of a credible restructuring plan on 3)
in the near term. Our conviction in outcomes for 4) is comparatively lower, given
current political sensitivities. Nonetheless, the interplay between politics and
reform remains complex and, thus, elections (scheduled for Q2 2019, but with a
possibility that they could be brought forward) may be a prerequisite for greater
clarity on reforms.
Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html.
Goldman Sachs CEEMEA Economics Analyst
In the past 25 years, the country’s leadership has undertaken at least four large-scale
economic reform initiatives: 1) the Reconstruction and Development Programme (RDP)
in 1994; 2) the Growth, Employment and Redistribution (GEAR) programme in 1996; 3)
the Accelerated and Shared Growth Initiative for South Africa (AGSISA) in 2006; and 4)
the National Development Plan (NDP) in 2011. The 1990s also saw the elaboration and
For the exclusive use of MATTHEW.NEWTON@GS.COM
Exhibit 1: Real GDP growth has been consistently lower than its Exhibit 2: The Rand has been consistently more volatile than other
EM peers in South Africa, moving below the 25th percentile since EM currencies, increasing considerably above the 75th percentile
2013 since 2015
Real GDP growth (yoy) versus a sample of 95 EM economies 24 month rolling standard deviation of monthly returns (against the
USD), versus a sample of 72 floating-rate currencies
12% 7
24m rolling st. dev of monthly EM interquartile range
returns against the USD
10% EM Median
6
8% ZAR realised volatility
5
6%
4% 4
2%
3
0%
-2% 2
EM interquartile range
-4% EM Median
1
-6% South Africa real GDP growth (yoy)
-8% 0
91 93 95 97 99 01 03 05 07 09 11 13 15 17 97 99 01 03 05 07 09 11 13 15 17
Source: Haver Analytics, Goldman Sachs Global Investment Research Source: Haver Analytics, Goldman Sachs Global Investment Research
4 May 2018 2
Goldman Sachs CEEMEA Economics Analyst
diminished thanks to the Rand adjustment and growth slowdown in recent years, and
the current account balance has narrowed to around 2.5% of GDP (down from a peak of
nearly 7% of GDP reached in 2007). The Harvard team’s recommendations were to
address the following issues via policy interventions: real exchange rate volatility, the
skills mismatch, labour market rigidities, a lack of competition and elements of the BEE
that act as a tax.
The NDP – led by former Finance Minister Trevor Manuel in conjunction with Cyril
Ramaphosa (as a political sponsor) in the early years of Mr. Zuma’s presidency – took a
broader approach to development policy (encompassing social, demographic,
environmental and health policy aspects), as well as a longer-run perspective (proposing
a 2030 vision), arguing that much could be achieved within the current policy framework
by improving service delivery and policy implementation, and effectively “getting the
basics right”. Its objective is to eliminate poverty and reduce inequality by 2030, raise
living standards, create jobs, broaden ownership and control of the economy, and
capitalise on what it describes as the “demographic dividend”. Its key proposals include
active labour market policies (including incentivising high-skilled immigration), public
investment and jobs programmes, education reform and introducing policy certainty.
4 May 2018 3
Goldman Sachs CEEMEA Economics Analyst
Exhibit 3: South African real export growth has persistently been Exhibit 4: Investment as a share of GDP in South Africa has been
below the median EM economy, again moving below the 25th consistently weaker than its EM peers
percentile in recent years South Africa investment (Gross Fixed Capital Investment % of GDP),
South Africa real export growth (yoy, 4QMA) against a sample of 95 EM versus 95 EM economies
economies
25% 35%
20%
30%
15%
25%
10%
5% 20%
0% 15%
-5%
10% EM interquartile range
EM interquartile range
-10% EM Median
EM Median
5%
-15% South Africa real export growth (yoy) South Africa (GFCF as a percent of GDP)
-20% 0%
91 93 95 97 99 01 03 05 07 09 11 13 15 17 91 93 95 97 99 01 03 05 07 09 11 13 15 17
Source: Haver Analytics, Goldman Sachs Global Investment Research Source: Haver Analytics, Goldman Sachs Global Investment Research
For the exclusive use of MATTHEW.NEWTON@GS.COM
Exhibit 5: Particularly since the crisis, Agricultural and Exhibit 6: Since 2008, private sector investment has been declining
Manufacturing investment has been declining relative to other relative to public investment
parts of the economy Private sector capital (% of total capital stock)
Agricultural and Manufacturing capital stock (% of total capital stock)
12%
64%
10% 62%
60%
8%
58%
6%
56%
50%
0% 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Source: Goldman Sachs Global Investment Research, Haver Analytics Source: Goldman Sachs Global Investment Research, Haver Analytics
4 May 2018 4
Goldman Sachs CEEMEA Economics Analyst
Exhibit 7: Political and Fiscal risk has been a primary driver of ZAR volatility in the last 3 years
ZAR TWI Index, 2010=100 (LHS); ZAR/USD (RHS, inverted)
80 8
Ramaphosa wins ANC
leadership contest
Moody’s shifts 9
Gordhan removed
75 from Finance outlook to stable
Ministry 10
Nene removed from Zuma exit
2017 MTBPS and
Finance Ministry and S&P
70 Budget 11
downgrade Speech
12
65
13
60
14
55 15
16
50 ZAR TWI Index (LHS)
17
ZAR/USD (RHS, inverted)
For the exclusive use of MATTHEW.NEWTON@GS.COM
45 18
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
The first factor (property rights) must be understood in its historical context, taking into
account the legacy of apartheid. According to the World Bank, the distribution of income
and assets in South Africa is among the most unequal in the world, and levels of
disenfranchisement remain elevated. As a result, policy has explicitly sought to broaden
ownership and control of the economy, via redistributive programmes such as the BEE.
Given that the distribution of land ownership, in particular, remains highly skewed and a
politically charged issue, policy discussions have focused on this sector, along with the
mining sector. In our view, uncertainty surrounding property rights will continue to act
as a constraint on investment unless the issue of inequality is addressed. We therefore
expect a proactive approach to redistributive policies on the part of President
Ramaphosa to reassure the market. The second and third factors highlighted above – an
uncompetitive market structure and other risks – in our view, are relatively more
self-explanatory.
We consider the diagnoses and policy proposals stemming from AGSISA and the NDP,
and analyse President Ramaphosa’s economic policy and structural reform agenda in the
context of these development frameworks. In doing this, we consider two key speeches
that President Ramaphosa has delivered on economic policy – in Soweto in November
2017 and on the occasion of the 106th anniversary of the ANC in January 2018 (following
4 May 2018 5
Goldman Sachs CEEMEA Economics Analyst
his election as ANC president) – as well as more recent comments and policy decisions
from the President and his cabinet members, as a basis for his reform agenda.
During his campaign for the ANC presidency, Mr. Ramaphosa laid out what he described
as a ‘New Deal’ for South Africa, designed to correct what he sees as policy missteps
and failures of leadership of the past decade, reverse the deterioration of institutions
and restore confidence. Mr. Ramaphosa has laid out ten policy priorities that he believes
will address these issues (Exhibit 8). These include instilling policy certainty (in particular
in the mining sector) and improving institutional stability and credibility, restoring fiscal
discipline, boosting private sector investment and supporting the manufacturing sector,
returning SOEs to financial health (leaving open the possibility of private sector
participation), promoting competition and reducing barriers to entry in monopolised
sectors, and combating corruption and ‘state capture’. Mr. Ramaphosa’s policy platform
also includes land redistribution and a de-concentration of ownership and control of the
economy, as well as a commitment to free higher education for the poor.
In his second speech, ANC president-elect Ramaphosa reiterated his policy proposals,
For the exclusive use of MATTHEW.NEWTON@GS.COM
with several qualifications to his agenda reflecting resolutions from the ANC’s 54th
National Conference. More specifically, Mr. Ramaphosa included a policy of land
expropriation without compensation as it had become official party policy, but stressed
that this must take place within the contours of the constitution and must also promote
economic development, agricultural production and food security. He also included in his
platform the ANC’s newly proclaimed policy of free higher education, although subject
to means-testing.
4 May 2018 6
Goldman Sachs CEEMEA Economics Analyst
Exhibit 8:
President Ramaphosa’s ’New Deal’ - 10 Priorities (as laid out in November 2017)
- Provide further support to the mining industry / expand the renewable energy programme
1. Place job creation first - Provide 1m internships to young people, through the Youth Employment Service programme
- Increase the minimum wage
- Target 3% growth in 2018, rising to 5% by 2023
2. Focus on growth and
- Increase investment from 20% to NDP target of 30%
investment
- Restore confidence by improving policy certainty
3. Pursue economic participation - Launch a buy and build campaign to rejuvenate local investment and develop SMEs
for the poor and the - Create 1m new jobs by 2030 within the Agricultural sector (as in the NDP)
marginalised - Review all regulatory requirements on start-ups to reduce the cost of doing business
8. Maximise the impact of new - Boost infrastructure investment to ZAR1.5trn over the next 5 years
infrastructure - Introduce private sector expertise
- Introduce private capital on a strategic partnership basis, to strengthen SOE balance sheets
9. Restore SOEs as drivers of
- Introduce new boards and executives to manage SOEs
growth and development
- Form an ’SOE investment company’ to oversee government investments in SOEs
- Pursue corruption and establish a judicial commission of inquiry
10. Confront corruption and
- Establish an ’anti-corruption appropriation fund’ to channel proceeds to employment intiatives
state capture
- Ensure adequate vetting of new appointments / consider ’rationalising’ the size of Cabinet
As stated in the NDP and in previous economic reform platforms, de-racialising (and
therefore changing and broadening) ownership and control of the economy – ultimately
implying a redistribution of land and capital – remains a key longer-term policy objective.
While some investors would likely not welcome such measures, we remain persuaded
4 May 2018 7
Goldman Sachs CEEMEA Economics Analyst
The market has welcomed Mr. Ramaphosa, but has yet to price in
structural reforms
Nonetheless, based on our conversations with market participants, our assessment is
that investors collectively remain somewhat cautious on the prospects for significant
economic policy overhaul on several counts, and would like to see greater evidence of
the following:
and execution, as well as resolving uncertainty in key sectors (e.g., land, mining).
2. A stronger reiteration of a commitment to fiscal consolidation (given that fiscal
pressures and downgrade risks have now eased) and specification of medium-term
fiscal parameters/objectives.
3. Articulation of a specific strategy to boost growth and reduce unemployment that is
more concrete than that contained in the NDP, so as to enhance the longer-term
credibility of the economic policy narrative and trajectory (in light of concerns over
social cohesion).
4. The largest investor concern remains political risks, and many observers will likely
be looking for Mr. Ramaphosa to unify his party and secure a popular mandate via
elections scheduled for Q2 2019. In this sense, the prospect of elections being
brought forward and evidence that Ramaphosa is solidifying his grip on the party
and demonstrating decisive leadership vis-à-vis the unions would likely be viewed as
welcome developments.
More specifically, the market has responded positively to policy decisions addressing
fiscal concerns, with the Rand appreciating after the 2018 Budget Speech; however, the
Ramaphosa administration may have enacted these policies under market and rating
agency pressure to do so. The key test, in our view, will be if the ‘New Deal’ policies
that are more structural and fundamental are enacted, now that market pressure has
decreased. If this happens, it would indicate a fundamental policy rethink rather than a
4 May 2018 8
Goldman Sachs CEEMEA Economics Analyst
reaction to market pressures, and would justify a significant further positive repricing of
asset prices. On the mining sector specifically, we would expect policy certainty to lead
to a decrease in capital outflows (especially in the income balance, thereby supporting
the current account), support investment and the Rand, and expand capacity (therefore
not adding to demand pressures). The same argument may also apply in the agricultural
sector, and would likely act as an incentive to South African corporates to discontinue
their pattern in recent years of sending capital offshore (sitting on large cash balances)
and disinvesting.
In addition, while the market has re-rated growth expectations higher by around 0.5pp
from 1.4% to 1.9% for 2018 since the December 2017 ANC National Conference, in our
view there remains further upside potential for the growth outlook. We forecast growth
of 2.4% in 2018 (revised higher from 1.5% prior to the conclusion of the conference) and
so, taking as a baseline the magnitude of our forecast revision and our assumptions on
the reform outlook, the market re-rating of growth expectations may be only halfway
complete. We also see risks to our growth forecast as being tilted to the upside.
For the exclusive use of MATTHEW.NEWTON@GS.COM
Mining sector
Mines minister Gwede Mantashe – a political heavyweight and close ally of Mr.
Ramaphosa – has indicated that he will finalise a draft of the mining industry charter in
the month of May. This is likely to specify targets for black ownership, lay out a clear
framework for licensing and taxation, and resolve policy uncertainty. The mining sector –
a key contributor to the South African economy and exports – has seen a decline in the
past two decades on the back of policy uncertainty and disinvestment, reducing
production, shedding jobs and has been a significant factor behind the erosion of the
country’s export growth. In our view, both symbolically and in terms of its importance to
the economy, restoring a stable policy framework that incentivises investment is critical
in the mining sector and the Ramaphosa administration is likely to take steps in this
direction by mid-year.
That said, clarification of the mining charter is unlikely on its own to resolve
uncertainties entirely. The recent announcement by Minister Mantashe that the ANC will
appeal the “once empowered, always empowered” decision by the North Gauteng High
Court (which ruled that companies that had reached 26% black ownership but
subsequently fell below did not need to top up their ownership and would not be
penalised) raises the prospect that lingering legal uncertainties will remain in the courts
for years to come, even with a clarified mining charter.
4 May 2018 9
Goldman Sachs CEEMEA Economics Analyst
Land reform
Mr. Ramaphosa has included in his platform a policy of land ‘expropriation without
compensation’ following the National Conference’s resolution to this effect, although he
has emphasised that this must take place within constitutional constraints and without
damaging the economy. Given the scope for infringing on property rights, this policy
has raised concerns among investors and landowners, not least because the ANC has
supported a motion tabled by the EFF in parliament to investigate constitutional
amendments to the section of the bill of rights that deals with the conditions under
which the government may expropriate land.
Our understanding of South African law suggests that in certain limited circumstances
South African courts would likely view expropriation without compensation as both
technically and conceptually possible within the contours of the current constitution.
Moreover, that this is likely possible and that there is therefore no need for
constitutional amendments is consistent with statements made by Mr. Ramaphosa and
his cabinet members and relatively widely accepted within the ANC. Moreover, as
Ramaphosa has mentioned in recent press statements, there is significant scope for
For the exclusive use of MATTHEW.NEWTON@GS.COM
redistribution and repurposing of land that is already in the hands of the state or SOEs,
without requiring any expropriation. The public debate around land-related issues also
largely centres on agricultural land, while in the view of many experts the most pressing
policy challenges are in urban areas, and therefore a focus on urban land may serve to a)
address pressing issues and b) depoliticise the policy, at least to some extent. Thus, we
expect that the ANC will opt to clarify its position that no constitutional changes are
required in order for it to enact its policy in limited circumstances, and we anticipate that
the Ramaphosa administration will clarify the conditions under which it foresees
pursuing land expropriations. If addressed pragmatically and in ways that work to
dismantle the negative spatial legacies of apartheid, we see scope for land reform to
contribute positively to economic activity.
SOE policy
Contingent liabilities on SOE balance sheets arguably represent the greatest threat to
South Africa’s fiscal position, in particular those at Eskom – which is highly levered and
faces short-term cash flow pressures. In January, the government announced board and
management changes at Eskom and Minister of Public Enterprises Pravin Gordhan has
recently guided that further changes and announcement of a restructuring plan are in
the offing in the near term.
Eskom faces cost pressures, a revenue shortfall, short-term liquidity needs and
longer-term solvency concerns. With debt (including government guarantees) amounting
to 8-9% of GDP, this clearly raises fiscal concerns. In our view, a mix of cost-efficiency
measures, higher tariff increases, financial engineering and recapitalisation is likely
needed to restore financial health to Eskom. Some degree of asset unbundling and
private sector participation may also be involved. We expect credible announcements to
this effect in the coming months, likely enabling Eskom to access international debt
markets.
4 May 2018 10
Goldman Sachs CEEMEA Economics Analyst
agreement with unions down the line. Third, the elite within South Africa’s civil service
itself represents a formidable vested interest, and so an inability to negotiate
successfully with this constituency should be interpreted negatively.
Exhibit 9: A high percentage of the government budget is dedicated Exhibit 10: Public wages have outpaced both private sector wages
to employee compensation and inflation since 2015
Employee compensation (% of primary government balance) Public-sector and private-sector wage growth (yoy, 4QMA)
12.0 Total
40% wage growth, Public
%yoy (4qma) Private
11.0
39% Inflation
10.0
38% 9.0
8.0
37%
7.0
36%
6.0
35% 5.0
Employee compensation (% of 4.0
34% primary government balance)
3.0
33% 2.0
08 09 10 11 12 13 14 15 16 17 18 12 13 14 15 16 17 18
Source: Goldman Sachs Global Investment Research, Haver Analytics Source: Goldman Sachs Global Investment Research, Haver Analytics
Not only is this issue symbolically important, but it is particularly challenging given its
importance to public opinion and the fact that Mr. Ramaphosa – a former trade union
leader – derives significant support from the unions and the left wing of his party. While
we are confident that the new administration will push to achieve positive outcomes for
the above three policy items, our conviction in a fiscally beneficial outcome for public
wages is relatively lower. Given the interplay between politics and reform, getting past
general elections (scheduled for Q2 2019, but with a possibility that they could be
brought forward) may also be a prerequisite for further clarification of President
Ramaphosa’s reform priorities.
Andrew Matheny
4 May 2018 11
Goldman Sachs CEEMEA Economics Analyst
Murat Unur
+44 20 7552-0457
murat.unur@gs.com
Goldman Sachs International
For the exclusive use of MATTHEW.NEWTON@GS.COM
4 May 2018 12
Goldman Sachs CEEMEA Economics Analyst
We do not expect the TCMB to proactively hike rates as the willingness to reduce
inflation to the 5%+/-2% inflation target in the near term is falling. We think that the
stability of the TRY will become increasingly important in the run-up to the elections and
that the TCMB will do just enough to attain it, which is why see risks to our 75bp hike
forecast in 2018Q3 skewed towards an earlier date. Following the recent rate decision,
For the exclusive use of MATTHEW.NEWTON@GS.COM
the market pricing is roughly in line with our forecast, which nevertheless remains above
Bloomberg consensus forecasts. Considering the underlying dynamics and that risks are
skewed towards more hikes being needed, and coupled with tightening global financial
conditions and the likely increase in the uncertainty in the run-up to the elections, we
maintain our conviction view to pay rates.
Reflecting our inflation forecast, and the Bank of Israel’s forward guidance that it will not
increase its policy rate before inflation is “entrenched” within the target range, we
expect the Bank of Israel to keep rates on hold until 2019, and expect a very gradual
pace of rate hikes thereafter. Moreover, we estimate that the Bank of Israel will continue
to intervene in the FX market this year, to slow the trend of Shekel appreciation. Despite
weak inflation and the Bank of Israel’s clear forward guidance, the market is pricing
interest rate hikes in Israel in 2018. We think the market is overestimating the potential
pace of monetary tightening in Israel, and hence we hold a conviction view to receive
Israeli rates, especially in the longer end of the Curve, which remains steep.
4 May 2018 13
Goldman Sachs CEEMEA Economics Analyst
South Africa: 10-year treasury bond yield Ukraine: 19s vs. 27s
10 10 % yield 3
% pp difference in
9 yields
2
For the exclusive use of MATTHEW.NEWTON@GS.COM
9 8
7 1
8 6
0
5
-1
7 4
3 -2
6 2y - 10y difference (rhs)
2
10y treasury bond mid yield 2y (lhs) -3
1
10y (lhs)
5 0 -4
11 12 13 14 15 16 17 18 May 16 Aug 16 Nov 16 Feb 17 May 17 Aug 17 Nov 17 Feb 18 May 18
Source: Goldman Sachs Global Investment Research Source: Bloomberg, Goldman Sachs Global Investment Research
We have argued previously that the curve should steepen on an absence of external
liquidity risks, a theme that has largely played out and which has seen front-end
steepening of the yield curve by more than 200bp. While we see scope for front-end
bonds to continue to rally, we now see greater value further out the Curve, preferring
the 5-10 year segment. In our view, the economic recovery and rebuilding of external
buffers should ultimately cause this segment of the Curve to outperform, leading to a
steepening of the term structure relative to the longer end of the Curve.
4 May 2018 14
Goldman Sachs CEEMEA Economics Analyst
Macroeconomic forecasts
CEEMEA Main Macro Forecasts
*We use year-end CPI forecasts for Russia
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021
Czech Republic 2.5 4.6 3.8 3.2 3.0 3.0 0.7 2.5 1.6 1.9 2.0 2.0
Hungary 2.1 4.2 4.1 3.3 3.1 3.1 0.4 2.4 2.3 2.6 3.0 3.0
Israel 4.0 3.3 3.3 3.3 3.2 3.0 -0.5 0.2 0.4 1.0 2.1 2.3
Poland 3.0 4.7 4.2 3.6 3.4 3.4 -0.6 2.0 1.6 2.2 2.5 2.5
Romania 4.8 6.8 5.2 4.5 4.1 4.1 -1.5 1.3 4.7 3.4 3.3 3.3
Russia* -0.1 1.5 2.0 2.9 2.9 2.9 5.4 2.5 3.3 3.6 4.0 4.0
South Africa 0.6 1.3 2.4 2.4 3.1 3.0 6.3 5.3 4.4 3.6 3.9 3.9
Turkey 3.2 7.4 4.0 3.5 3.1 3.1 7.8 11.1 11.3 9.7 8.0 8.0
Ukraine 2.4 2.6 2.5 2.8 3.0 3.0 14.9 14.4 13.0 8.0 5.0 5.0
Czech Republic 2-week repo rate 0.75 0.75 0.75 0.75 1.00 0.50 0.75 1.25 1.75
Hungary 3-month deposit rate 0.90 0.90 0.90 0.90 0.90 0.90 0.90 1.00 1.50
Israel Repo rate 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.25 0.75
Poland Reference rate 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.75 2.25
Romania 1-week repo rate 2.25 2.50 2.75 3.00 3.25 1.75 3.00 3.75 4.25
Russia Min 1-week repo rate 7.25 7.00 6.75 6.50 6.25 7.75 6.50 5.50 5.50
South Africa Repo rate 6.50 6.25 6.00 6.00 6.00 6.75 6.00 6.00 6.00
Turkey Late liquidity lending rate 13.50 13.50 14.25 14.25 14.25 12.75 14.25 13.50 12.00
4 May 2018 15
Goldman Sachs CEEMEA Economics Analyst
South Africa USD/ZAR 12.7 12.86 12.00 13.01 11.50 13.29 11.00
**Nigeria has a multiple exchange rate regime. Current rate and forecasts refer to the official rate whereas forwards are based on the interbank rate.
Exchange Rates
4 May 2018 16
Goldman Sachs CEEMEA Economics Analyst
Disclosure Appendix
Reg AC
I, Andrew Matheny, hereby certify that all of the views expressed in this report accurately reflect my personal views, which have not been influenced
by considerations of the firm’s business or client relationships.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs’ Global Investment Research division.
Disclosures
Global product; distributing entities
The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis.
Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics,
currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897); in
Brazil by Goldman Sachs do Brasil Corretora de Títulos e Valores Mobiliários S.A.; Ombudsman Goldman Sachs Brazil: 0800 727 5764 and / or
ouvidoriagoldmansachs@gs.com. Available Weekdays (except holidays), from 9am to 6pm. Ouvidoria Goldman Sachs Brasil: 0800 727 5764 e/ou
ouvidoriagoldmansachs@gs.com. Horário de funcionamento: segunda-feira à sexta-feira (exceto feriados), das 9h às 18h; in Canada by either Goldman
Sachs Canada Inc. or Goldman Sachs & Co. LLC; in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private
Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman
Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W);
and in the United States of America by Goldman Sachs & Co. LLC. Goldman Sachs International has approved this research in connection with its
distribution in the United Kingdom and European Union.
European Union: Goldman Sachs International authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman
For the exclusive use of MATTHEW.NEWTON@GS.COM
Sachs AG and Goldman Sachs International Zweigniederlassung Frankfurt, regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht, may also
distribute research in Germany.
General disclosures
This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we
consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates and
forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as
appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority
of reports are published at irregular intervals as appropriate in the analyst’s judgment.
Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment
banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division.
Goldman Sachs & Co. LLC, the United States broker dealer, is a member of SIPC (http://www.sipc.org).
Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and principal
trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, principal trading desks and
investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research.
The analysts named in this report may have from time to time discussed with our clients, including Goldman Sachs salespersons and traders, or may
discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities
discussed in this report, which impact may be directionally counter to the analyst’s published price target expectations for such stocks. Any such
trading strategies are distinct from and do not affect the analyst’s fundamental equity rating for such stocks, which rating reflects a stock’s return
potential relative to its coverage group as described herein.
We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act
as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The views attributed to third party presenters at Goldman Sachs arranged conferences, including individuals from other parts of Goldman Sachs, do not
necessarily reflect those of Global Investment Research and are not an official view of Goldman Sachs.
Any third party referenced herein, including any salespeople, traders and other professionals or members of their household, may have positions in the
products mentioned that are inconsistent with the views expressed by analysts named in this report.
This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be
illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of
individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if
appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them
may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.
Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.
Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors.
Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at
http://www.theocc.com/about/publications/character-risks.jsp. Transaction costs may be significant in option strategies calling for multiple purchase and
sales of options such as spreads. Supporting documentation will be supplied upon request.
Differing Levels of Service provided by Global Investment Research: The level and types of services provided to you by the Global Investment
Research division of GS may vary as compared to that provided to internal and other external clients of GS, depending on various factors including your
individual preferences as to the frequency and manner of receiving communication, your risk profile and investment focus and perspective (e.g.,
marketwide, sector specific, long term, short term), the size and scope of your overall client relationship with GS, and legal and regulatory constraints.
As an example, certain clients may request to receive notifications when research on specific securities is published, and certain clients may request
that specific data underlying analysts’ fundamental analysis available on our internal client websites be delivered to them electronically through data
feeds or otherwise. No change to an analyst’s fundamental research views (e.g., ratings, price targets, or material changes to earnings estimates for
equity securities), will be communicated to any client prior to inclusion of such information in a research report broadly disseminated through electronic
publication to our internal client websites or through other means, as necessary, to all clients who are entitled to receive such reports.
4 May 2018 17
Goldman Sachs CEEMEA Economics Analyst
All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all
research content is redistributed to our clients or available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our
research by third party aggregators. For research, models or other data related to one or more securities, markets or asset classes (including related
services) that may be available to you, please contact your GS representative or go to http://360.gs.com.
Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY
10282.
© 2018 Goldman Sachs.
No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written
consent of The Goldman Sachs Group, Inc.
For the exclusive use of MATTHEW.NEWTON@GS.COM
4 May 2018 18