South Africa less attractive as investment destination – Ernst & Young mining head
South Africa was seeing a downturn in its attractiveness as an investment destination, Ernst & Young mining sector leader Adrian Macartney said on Tuesday.
Macartney told an Ernst & Young media lunch in Johannesburg that loss of investment attractiveness should not be unexpected given that South Africa was entering a period of political change.
“Whilst the three letters ANC might be the same, I think, very clearly, we have almost a different party from pre-Polokwane to post-Polokwane,” he said.
However, he cautioned against attributing the downturn to politics alone, and said that there were also other factors that should be taken into account, notably the global credit squeeze as well as the risk some investors attached to developing countries.
There had been reports of funding being pulled back from the developing countries towards “safe haven” developed countries, because of tightening liquidity.
“So, there is a broader picture we need to understand,” he said.
Despite the liquidity crisis, there were still indications of the presence of substantial funds.
“There sure seems to be quite a few people who are still quite keen to pitch their money into this market,” he said, adding that, if one took the six times oversubscription into account, some $10-billion had been directed at AngloGold's offer of shares.
There seemed to be sufficient cash around when investors believed in the investment, Macartney said.
The pricing down of certain South African gold stocks might also have been the market’s desire for higher returns, in addition to avoidance of perceived political risk.
