Chris Hart: Brexit a wonderful cover up for SA's economy ‘stuff up’

Cape Town – Economic commentator Chris Hart said he fears Brexit will be used to cover up South Africa’s poor economic performance, which he says is self-inflicted.

Speaking at a workshop to unpack the impact of the UK referendum that saw Britons voting to leave the European Union (EU), Hart believed the Brexit vote will be used the wrong way by South Africa.

“I fear that Brexit will be used as a cover for our own problems,” he said. “South Africa is not growing, its heading into recession – if not already in one - and it’s all self-inflicted.

“We can blame nobody else, but we probably will,” he said. “Brexit provides a wonderful cover for the fact that we have stuffed up from a policy point of view.”

Hart resigned from Standard Bank this year after becoming embroiled in a twitter race controversy and is now an independent economic analyst and director of Leapfrog Global.

Hart said markets were quite extreme in their action following Brexit, because they had a preconceived idea that Brexit had to be a bad thing.

“Speculators had their own hubris,” he said. “They all believed Brexit wouldn’t happen. They also believed it was harmful and so thought you had to take this position.”

That belief resulted in the global markets losing $3trn since the Brexit vote, while the pound fell to a 30-year low. The rand also dropped about 8.5% at one stage, higher than the day President Jacob Zuma fired former finance minister Nhlanhla Nene.  

RELATED: Rand leads global currency gains

South African benchmark government bonds gained, driving yields to levels last seen before Nene was axed as finance minister in December, while the rand led global currency gains as foreign investors piled into local stocks and bonds.

“The overweight bubble position had to be unwound and that lasted two days,” Hart said. “Normality is already coming back to the market so do not panic," he said.

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