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Definition

An investor’s perception of the market and economy as a whole. Learning to develop and accurate view of the world economy and exactly where South Africa fits in to it is vital to the private investor. To do this the investor must consider many things such as the world inflation rate, the level of economic activity in the largest economies in the world - such as America, China, Europe and Japan. The state of international investor sentiment is very important - are overseas investors in a state of "risk-off" or "risk-on"? Where are interest rates now and where are they likely to go? What is happening to the oil price? What are the latest developments in technology - such as the impact of electric motor vehicles or renewable energy? Are there any major political events (such as Brexit) about to happen and what impact will they have on international trade and confidence? More recently, what is the impact of COVID-19 and will there be a second wave? All these questions and many others must form part of your view of the world economy. Having established where you think the world is going, you need to focus in on South Africa and try to establish how all these things will impact on our economy. Obviously, that means you need to think about the strength of the rand, the political stability of the country and the demand for the raw materials that we export. Form all of this you can begin to see where you should be placing your funds, what industries are likely to do well and which companies in those industries are likely to benefit the most.

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