Back on June 20, 2017, we published a bearish article on the South African economy and the stock market. We took this stance because the Zuma government is restructuring the economy and forcing labor rules in ways that benefit locals. Specifically, the government demanded increases in blacks ownership of local businesses and preferential treatment in the labor markets. Regulations like this which are designed for political and social purposes that assign ownership and economic opportunity based on government fiat and not hard work and merit are a sure way to damage the economy and the success of the companies that operate there. Ultimately they will damage the very people the government wants to help. We have seen this movie before. All we have to do is look at the ongoing collapse of Venezuela today and the collapse of Zimbabwe over the past few decades to see how this is going to play out.
