On the domestic front, both equity and bonds have been under pressure of late. Indeed, investing on the JSE has been a hard grind for the last three years and 2018 has thus far provided little relief. Our market’s drivers seem to have conspired against each other with frustrating regularity for some time now. When SA Inc. has rallied, the rand has strengthened (and vice versa); when Naspers was running, SA Inc. was battling; when we were getting some momentum, Steinhoff and Resilient happened. The net result has been a spluttering, stalling, frustrating sideways slog. Remember that eventually some of these factors (except for Steinhoff) will combine positively to produce an outsized positive surprise. In this report we take a step back and survey the fundamental drivers of the domestic market. We also highlight some compelling bargains amongst SA’s large corporates. Ultimately, we think these opportunities warrant our modest Overweight stance on SA equity.
For the full report and our views on each asset class, click here.