South Africa makes for an interesting case study because of the effect of its politics according to Xola Potelwa of Bloomberg News. Generally the rating of the currency is based on economic performance of the country and what it exports to the world. South Africa has always been one of the stronger countries in Africa because of its valuable resources including diamonds, gold, great farm lands, etc. Another factor in the value of the currency is what does the central bank do? are they stimulating the economy? At the moment, the South Africa central bank is trying to pull back which leads to politics. The present President who has lead the country for a number of years is seen as corrupt or the very least unethical and is fighting with the Finance Minister for control of South Africa’s finances. Anytime politicians fight for control means there is instability in the currency.  Will South Africa slow spending and lessen debt or will there be more spending?

Linking to dividend paying stocks, fortunately companies making profits tend to have stable management because people can wait; companies that lose money will have control issues over how can the company be restructured to make money again. When you read the annual report and look at the senior management team, the first concern is do these people like each other to work together to build the company? who is power hungry or wants power? they will either be encouraged to leave or internally will push their divisions to be more profitable to ensure their star rises higher. While companies are about the sales and continuing of the sales to make profits, the rest of the story is people.

There are more questions than answers, till the next time – to raising questions.