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The effects of SONA 2022 on Investors

The effects of SONA 2022 on Investors

The President's annual State of the Nation (SONA) address is always watched keenly by both economists and investors

As South Africa slowly emerged from the COVID Pandemic, the President focused on developing the South African economy and tackling the increasingly worrying trend of increasing unemployment, which stands at 46.6% on the expanded definition. This includes people who are unemployed and have given up looking for work.

The difficulties experienced by State-Owned Enterprises, the burgeoning Eskom debts, and concerned warnings from the International Monetary Fund (IMF) of government debts are now eating significantly into the annual budget expenditure.

What can investors expect for the rest of 2022?

The Rand is holding steady against major currencies on the currency front, showing its best performance over the last few weeks. This has a lot to do with the windfall of higher commodity prices, which also provides the government with a large tax windfall, putting less pressure on the fiscus and creating more wiggle room for the Minister of Finance when delivering the budget speech later in February.

The President's focus on partnering with private businesses to boost the economy has been very well received by economists all around.

Old Mutual chief economist Johann Els said that President Ramaphosa's SONA address signalled to investors that the government was prepared to work with the private sector to rebuild the economy despite all upside risks posed by load-shedding and political upheaval.

President Ramaphosa emphatically said that the government does not create jobs, a business does jobs, and the government's task was to create conditions that enable the private sector to thrive.

"SONA was very business-friendly in terms of statements made, but that needs to be followed up by action," Els said. "(President) Ramaphosa's statement about the government creating a conducive environment stands out as one of the most positive statements I have ever heard from a president."

Alan Mukoki, the SA Chamber of Commerce and Industry chief executive, said a private sector-led economy would finally set the country on a path of science-based planning.

Economic indicators for January have already shown that business confidence lifted at the beginning of the year, driven by increased trade and retail sales. Business expectations for the next six months were high.

Jack Edwards, Head of Marketing for CAPEX.com in South Africa, added that the positive outlook would help investors manage and grow their business portfolios.

"We're very excited to hear what President Ramaphosa had to say. As one of the world's leading CFD trading platforms, we're even more convinced that opening offices in South Africa is a good strategic move, indicating a global commitment to economic growth for ordinary South Africans.

"We strongly believe in South Africa's economy, and the President's speech re-confirms the government's commitment to working with the private sector. This will be a major boon for the economic outlook for 2022.

Edwards adds that CAPEX.com is broadening its focus by opening dedicated offices with training and support staff in Johannesburg. "This will make it far easier for South Africans to develop CFD trading skills. Our platform provides users with a free CFD Trading Academy – CAPEX Academy - to help ease new investors’ way into the market."

With increased business confidence and a commitment from the government to focus on economic recovery and job creation, CFD investment trading can form a vital part of any portfolio.

Edwards invited all readers to visit http://za.capex.com to open a free account and dip their toes into the investment market.

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