Avbob - Old Mutual

2011: Headwinds to the themes
Inflation
− Higher inflation in the emerging world is causing higher interest rates
− South Africa’s interest rate differential is less attractive
US recovery
− An upward “surprise” on growth will focus attention on tighter policy in
2012
Emerging markets
− Remain longer-term bulls, but a well-established theme
− Higher rates create a cyclical headwind
− Create the potential for volatility
Conclusion
− The rand is expensive and is vulnerable to a loss of momentum which is
impossible to time. Reduce exposure and increase offshore
diversification.
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