1. EXPLORING INVESTMENT OPPORTUNITIES IN SOUTH AFRICA

2. A BRIEF ABOUT SOUTH AFRICA
South Africa is the southern most state in Africa, surrounded by Mozambique, Zimbabwe, Namibia, Botswana and Swaziland
2nd largest African country in terms of GDP per capita after Nigeria.
Upper middle income economy and a newly industrialized country.
According to GCI is ranked 49th in 2015, moved up from 56th in 2014
South Africa is an efficiency driven economy
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market development
Technological Readiness
Market Size.
Unemployment, high Gini coefficient , HIV AIDS and low power infrastructure is one of the major problem faced by South Africa.

4. POLITICAL SCENARIO POLITICAL
Since the end of apartheid in the 1990s the African National Congress (ANC) has dominated South Africa's politics.
Jacob Zuma is the current president of South Africa.
Controversies regarding corruption in arm deals and using public money as a loan for personal interest have created some distrust among people.
Elections of 2016 have not been in favor of ANC and has been the worst performance of ANC after apartheid.
This may be a political transition in the history of South Africa .
Till now political scenario of South Africa had been perceived as stable.

5. ECONOMIC & CULTURAL SCENARIO
GDP per capita of $11,300 2nd largest in Africa and 34th in world.
Well developed financial, legal, communication and transportation sector.
Natural resources dependent economy.
Sophistication in business
Good domestic market size
Decent technological readiness.
Inflation 5.8%, GDP growth of 2.5%.
Attractive Corporate tax rate of 28%
Low on power infrastructure.
Poor macro environment
Ranks low on gross national savings
Government budget balance
General government debt.
High income disparity
Low life expectancy and prone to HIV Aids
CULTURAL
South Africa is a multiethnic society encompassing a wide variety of cultures, languages, and religions.
5 racial population group
Black Africans
White
Colored
Asian
Others
The constitution recognizes 11 official languages
Two of these languages are of European origin: Afrikaans developed from Dutch and serves as the first language of most white and colored South Africans
English reflects the legacy of British colonialism, and is commonly used in public and commercial life, though it is fourth-ranked as a spoken first language.
Christianity is the religion followed by 79.8% of population, Islam is followed by 1.6% and Hinduism by 1.2%.

6. 2.5% 6% WORLD BANK’S GOVERNANCE INDICATORS South Africa India
Voice & Accountability
Political Stability
Government Effectiveness
Regulatory Quality
Rule Of Law
Control of Corruption
South Africa
68.5
43.2
65.4
63.9
54.3
India
61.08
13.59
45.19
34.62
54.33
38.94
2014 Data
2.5% 6%
South Africa
India

7. FDI INFLOWS

8. SOME INDUSTRIES TO LOOK UPON
Automobile
Food Processing
Mining
Financial Services
Information Technology
HealthCare

9. MOST ATTRACTIVE INDUSTRY
South Africa's FINREBS is backed by
A sound regulatory and legal framework
Is sophisticated
Providing a full range of services – commercial, retail and merchant banking, mortgage lending, insurance and investment.
South African GDP fell by -1.2 % in 2016 Q1 but FINREBS sector grew by 1.9%.
Major contributor in South African GDP (21%).
High growth prospects as middle class income level is rising
Demographic dividend is high as 60% population lies below 30 years of age.
Hence industries like insurance, banking, business services, real estate are meant to prosper.
EMERGING MARKET FUND WEIGHTAGE

10. ENTRY & EXIT BARRIERS ENTRY
Sunk cost associated before reaching commercially viable operation.
Various costs in terms of acquiring and maintaining branches which is a challenge for entrants in particular. 
Costs of acquiring and setting up information systems technology, switching behavior, high capital requirements and access to payments systems as potential constraints.
The costs of complying with complex financial laws and regulations that frequently change. 
Lack of funding
High cost of capital for unknown players.
EXIT
The cost of laying off staff, and contractual obligations such as the payment of rent.
Artificial barriers erected by company itself as a strategic decision to not communicate to the competitors and market that it is leaving the market soon.

11. MONETARY & FISCAL POLICIES
South Africa Monetary Policy Chart
Inflation Targeting Framework
Target Inflation Rate: 3%-6%
Current Inflation: 6.3%
Repo Rate is at 5.75% and is expected to remain unchanged
Following an expansionary monetary policy but sustenance is not expected.
Corporate tax rate at 28%
High budget deficit- decreasing trade volumes
A deterioration in the growth outlook highlights
Structural fiscal weaknesses
An unsustainable debt load
An excessive share of compensation within expenditure.
Govt. may be forced to increase tax rates which will be unattractive for investors.
5-Year South Africa USD CDS

12. CAPITAL MARKETS
The Johannesburg Stock Exchange Limited (JSE) is the only licenced exchange for the listing of equity (and debt) securities in South Africa.
JSE ranks 2nd in the world for exchange regulation and 1st for ease of raising debt and equity capital.
JSE led African exchanges in IPO transactions and capital raised in the past five years.
The JSE has two boards for listing equity securities:
The Main Board.
The Alternative Exchange (AltX) for small and medium-sized companies.
The procedure for a foreign company seeking to inward list equity securities on the JSE is subject to the same requirements as those applicable to a domestic company. 
There was a 65% increase in equity capital raised for 2014 and the JSE saw 14% more capital raised as compared to 2013.
In 2014, the financial industry accounted for 35% of the total capital raised.
In the first six months of 2015, the consumer goods industry accounted for 53% of the total capital raised, with the financials industry contributing 26%.

13. JSE &NSE PERFORMANCE 5 YEARS
JSE/FTSE
NIFTY

14. CURRENCY RISK & DERIVATIVES AVAILABLE
Rupee depreciated by 25%
Freely traded and not controlled by government.
High correlation with commodity prices and hence volatile.
No INR to ZAR derivative is available on exchange hence INR/USD and USD/ZAR derivative is to be bought or OTC market.
Currency Derivatives available on JSE to hedge
ZAR futures
ZAR Options
Maxi ZAR Futures
Cost for 1 yr ZAR future is 7.04%.
Benefit from 1 yr INR future is 6%.
Rupee appreciated by 25%
INR per 1 ZAR
2015
INR 9.75%
100
USD Equivalent
1.49
ZAR Equivalent
22.39
Return of 10.45%
24.73
2016
ZAR
USD future 1 yr
1.55
INR equivalent
109.76

15. Conclusion
Currently due to global environment there is volatility and there are uncertainties in the business sector in South Africa.
To support the export South Africa will continue to devalue its currency.
Government is focusing on power infrastructure and have been successful in bringing co- investment in renewable sector.
Government is executing a plan to bring state owned companies from losses to profit so as to reduce burden on fiscals and hence can contribute that amount of money in creating jobs and business opportunities.
Primary target for government is to decrease the disparity and have inclusive growth.
Geography gives an opportunity for business to expand in its neighboring countries where growth potential is high for e.g. Lesotho ,Mozambique, Botswana etc
Decision:
South Africa has got a good potential with strong infrastructure in place and business supporting policies but currently, India has a better growth opportunity than South Africa. As the global scenario and domestic political conditions of South Africa becomes stable, invest in a company which has competitive advantage in industries like Financial services, Real estate, automobile and healthcare, as huge opportunities lie in these areas.

16. THANK YOU 