An economist has warned investors to tread with care when dealing with bonds and equities; this is simply because the prices have gone up over the years.
While financial markets have done well in the past, it has somehow become risky as bonds and equities prices have gone up and as such investors need to be conservative when dealing with such, a chief economist has said.
When presenting on the market and investment expectations for 2015 on Thursday, Chief Economist at STANLIB, Kevin Lings, cautioned that investors have to be considerate when dealing with bonds and equities and be aware of the risks they are dealing with.
When comparing emerging and developed markets, Lings is of the view that emerging markets are no longer exciting as they used to be and this has rendered developed markets more exciting.
“China was the key focus for emerging markets, one of the reasons the country is slowing down is manufacturing and it has become the most expensive place for doing business. They are importing fewer commodities,” Lings said.
However, Lings feels the African continent has the potential to have a booming economy as supported by the amount of funds in foreign reserves and the growing GDP. “There is more money coming into Africa than it is leaving Africa,” he said.
“The fundamentals have changed. We are not investing in ourselves,” he said and explained that by investing in ‘us’ he means by building infrastructure such as schools, hospitals and roads. Though he said there is notable growth in Africa in terms of GDPs, this in essence cannot be regarded as sustainable growth with the absence of infrastructure.
Also worrying in the continent is lack of creation of job opportunities for inclusive. “As long as you add jobs to the economy it obviously grows,” Lings pointed out. With the local unemployment currently standing at 19.8 percent, according to the 2015/16 budget speech, Lings said he is surprised by the figure considering the local GDP.
“If you look at countries such as South Korea, it does not produce any natural resources but they are able to contain the unemployment rate,” he said. Asked about his take on initiatives introduced by the government to bring unemployment under control, Lings said any person employed in any capacity is a positive move as they contribute to the economy to some extent but the problem starts when such programmes are not properly administered and don’t serve their designed purpose.
“Every time I look at the unemployment figures of Botswana I get surprised,” Lings said.
“Once a person is employed in any capacity even not on permanent basis, it makes the person more employable in the future,” the economist said.
He suggested that there should be a regional hub which can help to produce more opportunities and with a regional hub in place it will be better to develop infrastructure within the region. Another economist from STANLIB, Kganya Kgare, also believes the local economy will be the envy of others in the future.
“If Botswana keeps on growing at the current rate, it will take around 13 years to double its economy,” Kgare said. Besides, he said, the country possesses a huge potential in many fronts including production of energy.
With abundant coal reserves found in the country, Kgare said this could be a huge potential for Botswana to produce its own electricity and export a surplus to other countries such as South Africa which is also facing challenges in that respect.