Business Opinion

Best news in 17 years for South African stocks from one of the United States’ largest banks

Luke Fraser

 ·23 Jun 2026

South African investors are optimistic about the South African equity market, with the highest share of buys to sells since 2009.

This is according to Bank of America’s latest fund manager survey for June, with views from 14 fund managers.

The survey showed that 64% of fund managers expect the South African equity market to be up in six months’ time, up from 50% last month.

This is still down from the 74% seen before the start of the Iran war in February. However, one should note that the survey was conducted between 5 and 11 June, prior to the Iran-United States peace deal.

In the latest survey, fading growth and inflation concerns propped up South African equity bulls, net 50% after a two-year low of 33% in May. This is still far below the pre-war February high of a net 88%. 

However, BofA said that the decline in equities since February leaves plenty of opportunities.

93% of survey respondents are seeing more buys than sells, up from 58% in May. This is the highest score since 2009.

A net 57% of investors are overweight South African equities, down from 67% last month but still elevated versus history.

The key risks for local equities are de-rating due to higher rate expectations, weaker earnings per share and sticky inflation.

Among the primary sectors investors are looking at, banks remain the clear favourite, followed by metals and mining.

The least preferred sectors are beverages & tobacco and gold, both of which have seen a sharp cooling in sentiment, as well as telecoms.

Interest rate hike still likely

The fund managers surveyed believed that the stagflation setup from last month has largely disappeared due to moves toward resolving the Iran conflict and lower oil prices. 

A net 0% of fund managers were also bearish on the South African economy for the coming twelve months.

This was an improvement from the previous month, when a net 25% of fund managers expected the economy to weaken.

Inflation expectations have also eased, with a net 7% of experts now expecting higher inflation over the next 12 months. This is far lower than the 75% of fund managers in May.

That said, hawkish South African Reserve Bank repricing remains, with a net 100% expecting a repo hike in Q3.

The SARB was widely expected to cut interest rates at the start of the year, with inflation hovering around the new 3% target.

However, the war in Iran led to a massive surge in oil prices, followed by massive rises at the pumps in April.

While the US-Iran peace deal is good news for the South African economy, SARB Deputy Governor Rashad Cassim recently told BusinessTech that the SARB needs to see how sticky inflation is.

Sticky inflation means prices take longer to come back down, which could lead to further tightening to get prices back in line.

Food prices also remain a central concern for inflation, with higher oil prices potentially increasing input costs for fertilisers. Food is the second largest component of the CPI basket.

The El Niño weather phenomenon, which brings drought-like conditions to South Africa, poses another risk to inflation.