Along with Brazil, South Africa was only a few years ago hailed as an emerging market success story, with a relatively stable political and economic landscape. But there has been a sudden reversal of fortune for the two countries, according to Hermes Investment Management.
"Investors used to love it," said Elena Tedesco, emerging markets director at Hermes, about South Africa.
"Investors used to think that it's a country that is growing, where the middle class is emerging, where politics was relatively stable. Now things have changed a lot, growth is declining- this year it could be below 1 percent, and we're talking about a lot of corruption."
Holding parallels to the corruption scandal emerging out of Brazil, corruption allegations against South African president Jacob Zuma came to light last week after he was accused of using public funds to renovate his private country estate. Zuma has apologized for the use of the public resources but is refusing to reimburse some of the funds; the South African parliament this week is debating the motion to impeach Zuma.