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Trading in South Africa: trends, opportunities, and risks for 2022

Published Apr 6, 2022

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South Africa's economy is currently in a state of semi-recovery from the recent Covid pandemic and multiple financial setbacks.

But there are numerous opportunities for investors who want to diversify their portfolios and gain exposure to JSE (Johannesburg Stock Exchange) listings.

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However, it's crucial to monitor domestic unemployment levels, government attempts to boost infrastructure, and the local tourism trade. What are the major trends taking place in South Africa's economy for 2022, and how can investors take advantage of opportunities in one of Africa's most dynamic nations?

Step one is to review the major features of the national financial situation and identify what the balance of the year might hold.

South Africa’s stock market outlook

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As tourism begins to bounce back from a terrible Covid takedown, South Africa's national economy could improve throughout 2022. The effect of the Ukraine and Russia conflict is not hitting South Africa as hard as it has many Eastern European countries, even though domestic unemployment remains a significant challenge.

Traders who use reputable brokers like AvaTrade to take part in South Africa's potential 2022 recovery can use CFDs (contracts for difference) to trade stocks, commodities, cryptocurrency, and other asset classes without the need to own the underlying assets. Every trader should learn as much as they can about the various markets, types of securities available, international economic trends, and everyday brokerage terminology in order to navigate the global marketplace with ease and confidence.

Risks

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While there are many bright spots on the near-term horizon for South African markets, it's important to keep an eye on potential trouble areas.

Crime

They include a rapid, nationwide increase in violent crime, which has a direct impact on domestic business profits. Riots and unrest at dozens of factories, particularly petroleum companies, have led to calls for not only a new government but for a whole new way of dealing with violent mobs.

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Weak infrastructure and widespread corruption

It's essential to closely monitor the nation's internal difficulties for signs of potential long-term setbacks. Additionally, poor infrastructure is another domestic challenge that has never been adequately addressed by political leaders. Along with the infrastructure problem, there is a new wave of government corruption that appears to be at the highest levels, where payoffs and bribes are becoming a common element of daily life.

Unemployment and lack of basic services

High unemployment, which currently sits at somewhere above the 25 percent mark, is yet another factor in the nation's long-term financial woes. In a country long known for delivering almost no government services, the job situation is particularly challenging for the nation's working adults who struggle to find jobs that pay a living wage.

Opportunities

There are several unique factors that make South Africa, even in its current turbulent state, a potentially profitable region for traders of all kinds. First is the Johannesburg Stock Exchange (JSE), which is one of the world's premier centers of investing and trade.

The JSE

Individuals who are not located in South Africa can still buy commodities, stocks, and other assets listed on JSE to their advantage. Keep in mind that many of the securities on the Johannesburg Exchange are not available anywhere else. Plus, depending on where you reside, it might be necessary to open an account with a broker who offers direct access to JSE.

Diversification

Likewise, many international trading enthusiasts prefer to include at least a few South Africa-based securities in their portfolios for reasons of diversification. It's important to maintain holdings from different geographic regions, and because JSE is the largest exchange in the region, it offers a wide-ranging menu of stocks and other assets for investors and traders from all over the world.

Tourism

What's in store for 2022 in South Africa's local economy, and how can people from other nations benefit? First, look for the nation's tourism trade to expand significantly as Covid restrictions are finally eased by the government. For at least two years, one of South Africa's biggest sources of revenue, tourism, took a major hit as a direct result of Covid. It's not a secret that South Africa was the first nation to report the omicron variant of the virus. That fact made a difficult situation worse and virtually shut off all tourist travel and profits.

Exports

As global economies begin to recover from the pandemic, look for South Africa's machinery exports to increase and its gold output to ramp up as well. The country's major exports include platinum, gold, heavy equipment, diamonds, and industrial machinery, all of which could significantly rebound as worldwide pandemic restrictions ease and business gets back to normal.

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