JOHANNESBURG - Morgan Stanley is positive about South African assets, saying the impact of the Iran conflict is starting to fade and the outlook is improving.
The bank expects the interest-rate cycle to peak soon, with a possible final 25 basis-point hike in July before easing begins.
Despite softer growth and higher inflation, Morgan Stanley said South Africa’s medium-term outlook remains intact.
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Lower inflation, improved electricity supply and stronger lending are expected to support growth, with the economy expanding by 1.2% this year.
The bank is bullish on local bonds, citing better public finances and the potential for further credit-rating upgrades.
However, the rand outlook remains uncertain, with dollar strength and softer commodity prices weighing on the currency.