South Africa: what will be hot in 2010

There is no other show in town: for South Africa 2010 is the year of the Football World Cup, the first time it is being hosted by an African country in this football-mad Continent. Expectations are extremely high and go well beyond sport. Everyone, from Government to ordinary people, from businessmen to bankers, expect the economy to reap big dividends from the Cup. By putting the country on the world stage, proving it can organise a big international event, reassuring all those who have heard the horror stories, showing sleek modern airports and impressive new buildings, tight security and hi-tech connections, the World Cup should give a boost not just to tourism but to employment, foreign investment and in general to South Africa Inc. So the year has started on a wave of optimism, helped along by the formal end to the short-lived recession. Football aside, we can expect the following to do well in 2010:

1) Africa

The trend, already evident in 2009, will consolidate further this year. All banks, South African and foreign, want a bigger presence in the Continent to take advantage of growth opportunities and largely untapped markets as well as project and infrastructure financing opportunities and international bond issues. Johannesburg will remain the gateway to the Continent, with most of the hiring for all but the most junior positions in African countries done in South Africa's business capital. "Africa will remain a strong focus," says Mike Atter, SA country manager for Robert Walters Professional Recruitment Services. "Every single bank we deal with has asked us to find people for their offices in Nigeria or Zambia or Angola. It is not easy to find the right people so we always have to look abroad as well."

2) Standard Bank:

Africa's biggest bank by assets has long had a strong presence in the Continent and it made great strides last year, expanding its operations in Nigeria and other key countries. It deservedly received the Bank of the year for Africa award at the 2009 The Banker Awards. Its expansion in Angola, where it managed to obtain a licence for a full-service bank with an emphasis on corporate and investment banking, will serve it well in 2010. The bank can also position itself as the conduit for trade between Africa and Asia, thanks to its links to China. Standard Bank is 20% owned by Industrial and Commercial Bank of China.

3) Standard Chartered:

Specialising in emerging markets has served the bank well in 2009 and will prove to be even more of an asset in the year ahead. The bank is on track for a record profit in 2009 and last summer it completed its acquisition of First Africa Group, an M&A advisory boutique, to provide finance services to all international clients in Africa-related transitions. In 2010 Standard Chartered has plans to expand its wholesale banking franchise across Africa and to recruit high-profile people.

4) The stock market

According to HSBC research, since 1966 there has remarkable consistency in the behaviour of the stock market in the country hosting the World Cup. It tends to perform very strongly in the months leading up to the big event. In 2002, for example, Japan and Korea, joint hosts, saw their stock markets outperform the world by 10% and 24% respectively, while in 2006 Germany's market outperformed by 9 per cent. The US is the only exception in 50 years of the market underperforming ahead of the tournament. So, regardless of the state of the economy, the JSE should boom and with it employment opportunities. Sentiment is key.

Despite positive sentiment and football-mania sweeping the country, not all will necessarily be well in South Africa in 2010. Here's a pointer to those sectors and people less likely to score a goal:

1) The stock market:

According to the same HSBC research (see above), the stock market tends to fall very sharply in the host country in the second half of the year after the World Cup is over in July. After the rally the markets in Japan and Korea, for example, underperformed by 9% in the second semester. The only exception to the rule appears to have been Germany, where the stock market continued to outperform even after the Cup, even though the host country had lost the tournament, which is also likely to happen in South Africa's case....

2) Retail banking:

Recruitment opportunities are likely to be few and far between, experts say, because it is a mature market with no growth prospects in 2010. South African banks have been resilient to the crisis, but the recovery is expected to be slow and weak economic conditions are putting pressure on fundamentals and asset quality and profitability. It is no coincidence that SA banks are targeting investment banking and expansion to Africa as growth areas rather than retail banking at home.

3) Foreign banks:

They are expected to be more active in 2010 than they were last year, but still very much in a cautious recovery mode so recruitment activity is likely to be kept to a minimum. "Local banks will continue to have the advantage, recovering faster, making bigger profits and leading the way in hiring," says Peter Mommsen, director of Unique Personnel in Johannesburg.