Matthias Hoppe, senior vice president and portfolio manager at Franklin Templeton Solutions, was quoted by Moneyweb.co.za saying that due to currency and valuation concerns, the emerging market funds in their multi-asset strategy business do not have a lot of exposure to South Africa:
“South African equities right now are one of the most expensive within emerging markets but also compared to developed markets… We would prefer bonds and cash right now instead of equities just because of the valuations.”
He says that South African bonds offer a yield that investors won’t find anywhere in the developed world. Otherwise and given South Africa’s stock market run last year, he is cautious about South African stocks saying that investors should stick to the more defensive sectors in the local market.
Hoppe noted that while local energy supply is taking its toll on economic activity and growth, things could recover gradually this year – especially thanks to lower oil prices.
In addition, the current account balance should improve and inflation should be lower, although the outcome of public sector wage negotiations could impact the inflation outlook going forward. Given the impact of prolonged strike action on the South African economy during 2014, he expects the economy to grow somewhat faster in 2015.
Nevertheless, Hoppe believes there are probably better opportunities in emerging markets in terms of stocks than in South Africa right now.
- ETFs Add to African Access (S&P Global)
- Downgraded Countries Were Top Emerging Market Performers in 2016 (IOL)
- Mining’s Iron Grip on the South African Economy (Reuters)
- Africa Rising: The Hopeful Continent (Wellington Management)
- How Big is Africa’s Car Market? (African Executive)
- ECB Rate Cut Will Likely Send Return Hungry Investors to South Africa (BusinessDay)
- Iron Ore, Gold Rush Push South Africa’s Miners to 11-Year High (Bloomberg)
- Consumer Prices Likely to Rise Sharply in South Africa – BNP Paribas (BusinessReport)
- South Africa’s Economic and Potential Downgrade Woes (Bloomberg)
- South African Gold Mines “Would Not Weather Strike” (BusinessDay)
- Moody’s Downgrades South Africa Banks, Insurance Companies and Others (Moody’s)
- Naspers’ Tencent Stake Drives the MSCI South Africa Index’s Returns (KraneShares)
- ADvTECH (JSE: ADH): Becoming a Pan-African Education Business
- S&P South Africa Downgrade Excerpt (Rand Daily Mail)
- Income Ideas From Emerging Markets (Institutional Investor)