Finding New, Smart Perspectives

Although the market outlook on South Africa has cooled somewhat since the first quarter, there are some great opportunities to be found, as illustrated by the funds we look at in this edition.

- Leon Kok

The past quarter has been pretty eventful both domestically and globally, and we were left with a measured range of views and outlooks to digest following meetings with several leading market analysts in both Cape Town and Johannesburg late in April.

Generally we found the market outlook on South Africa to be significantly more subdued than the hype prevalent during President Cyril Ramaphosa’s ‘New Dawn’ in the first quarter.

Many well-worn issues of poor public management, state capture and corruption were raised again, and it was widely agreed that to get beyond the reprehensible ruin of the Jacob Zuma years will require an extended period of competent and rational macro- and micro-economic management, accompanied by the necessary structural reforms.

The consensus growth outlook for the domestic economy was 1% for this year, with most analysts expressing considerable concern about weaker-than-expected manufacturing production and markedly lower mining production.

That said, there is no reason to be entirely dismayed, according to Louis Niemand, director of Investec Asset Management. He has reminded us in this edition that since 1990 the local equity market has delivered an annualised return of 13.9%, and over the longer term, equities have always outperformed other asset classes and beaten inflation.