It may be time to drop gold and tech stocks and buy into South Africa\u2019s domestically focused stocks, according to JPMorgan Chase & Co.<\/p>\n
The broker upgraded its view on South African equities to overweight from underweight this week, saying the global value trade driven by faster economic growth, stronger commodity prices, a weaker dollar and fewer trade tensions with the incoming US administration will benefit domestic stocks such as banks and value cyclicals, at the expense of gold and tech firms.<\/p>\n
\u201cWe see further headroom\u201d for stocks in JPMorgan\u2019s South African basket to outpace an offshore basket, strategist David Aserkoff wrote in a note dated 23 November.<\/p>\n
While the former group has risen 14% in US dollar terms and outperformed the latter by 19% in the last three months, domestics are still down about 18% year-to-date, he said.<\/p>\n
According to Aserkoff, locally focused stocks will also get a boost from incrementally positive newsflow as the country\u2019s reform process progresses.<\/p>\n
Financials, general retailers and industrials, which have all fallen in 2020, are expected to continue re-rating in 2021, he said.<\/p>\n
More from the report:<\/p>\n