BusinessTech.co.za quotes a column Osemwegie wrote on the international stock market insights and financial analysists website SeekingAlpha.com in which he says the Johannesburg Stock Exchange (JSE) All Share Index will fall to the band between 35,000 and 40,000 within 12 months.
Osemwegie, who is MD at Evago Global Capital, says the current negative media attention South African president Jacob Zuma is currently getting is also not good for the prospects of the country.
The JSE All Share Index reached a record high of 55,355 points in April 2015, but has since receded to 51,300 points, although it traded at nearly 54,500 points as recently as May 2016, before the Brexit vote, which left global markets reeling.
“Despite this,” says Osemwegie, “I do not agree with the view that president Zuma is solely responsible for the current ills affecting South Africa, which are likely to get worse after the exit of the UK from the EU.”
Not even Brexit is really making it worst than it is, the hedge fund manager says as he does not foresee significant longer term consequences for South Africa as a result of Brexit. He says the country’s internal problems are to blame stating that a mass disenfranchisement within the country has split the county into two groups – a rich and affluent South Africa and a poor South Africa.
“Artificial programs of inclusion like the land redistribution and black empowerment programs can only be useful if skills gaps are bridged to help the great majority of the population utilize the opportunities to better themselves, the nation and future generations,” Osemwegie says.
He said that the government is short-sighted – content to maintain the status quo while paying lip service to the concept of deep social and structural reforms. Those areas of the economy that will pay the largest dividends like education, healthcare and skills development have been left far behind.
“The truth is South Africa is really on an interest rate precipice, they are very exposed to external shocks. Looking at the South African economy, a casual observer would not really notice anything dramatically amiss, in fact inflation is gradually falling but beneath the surface, the social discontent in the rainbow nation is really palpable.
“What we are witnessing in South Africa is a very challenging situation, an edifice whose centre has been hollowed out… The inevitable crisis coming will be the opportunity that they need to rebuild the economy again from the ground up.’
But for now, investors will have to pack their bags and take a hike.