Morningstar is steering clear of South African stocks in its global portfolios, citing weak economic growth despite valuations that are often considered inexpensive. The assessment is presented as a shift in how the firm weighs growth potential versus price levels for emerging-market exposure.
The reporting points to a broader comparison across emerging markets. Moneyweb quotes Morningstar’s view that South Africa lacks the “growth factor” seen in other emerging economies. Bloomberg similarly links the reduction in South African exposure to relatively weak economic growth, suggesting it is a key driver behind portfolio decisions rather than market pricing alone.
Across the two outlets, the core message is consistent: Morningstar prefers other countries perceived to offer stronger growth prospects, with Brazil and Mexico singled out in the coverage. The differing emphasis is mainly on phrasing and framing—Moneyweb focuses on the absence of growth momentum, while Bloomberg highlights the trade-off between weak growth and attractive valuations—rather than on any disagreement about the underlying rationale.
