Is the energy crisis in SA going to affect the markets?
Power is essential for any modern economy. A continued lack of power will affect growth of the economy, which will erode earnings generation, stock market potential and wealth creation. Certain key industries such as mining could be adversely affected in terms of production. This will have a negative effect on exports and the resultant foreign currency inflow. Many other developed economies have managed to deal with power crises in the past without it significantly impacting on economic growth. Some experts estimate that the energy crisis may cut growth in South Africa by half a percentage point this year and deter foreign investment in South Africa. Lower growth means lower earnings for most companies. Lower earnings result in lower share prices and lower equity returns which, depending on your exposure to equities, may negatively affect the value of your retirement savings. The effect would probably be mild and should not cause investor panic.
