If the value of financial assets declines, the money available in these pension and provident pools will shrink accordingly. Separately, research shows that some of the savings vehicles typically used by poor people, such as stokvels, are gradually being invested in financial assets to create wealth rather than being used solely for short-term purposes (such as, for instance, to cover funeral costs).
2 Again, any drop in the value of these financial assets would undermine the efforts aimed at creating wealth through such savings vehicles. Finally, rating downgrades cast general doubts on the long-term economic and financial health of a country. This is because downgrades typically weigh on business confidence, undermining companies’ willingness to invest in new productive capacities and boost the size of their workforce.