{"id":602742,"date":"2022-07-04T13:09:47","date_gmt":"2022-07-04T11:09:47","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=602742"},"modified":"2022-07-04T13:09:47","modified_gmt":"2022-07-04T11:09:47","slug":"uk-investment-giant-sees-big-opportunities-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/602742\/uk-investment-giant-sees-big-opportunities-in-south-africa\/","title":{"rendered":"UK investment giant sees big opportunities in South Africa"},"content":{"rendered":"

The South African unit of M&G, the UK fund manager overseeing more than $390 billion in assets, sees opportunities in investing in the nation\u2019s industrial and financial companies as earnings growth may surprise.<\/p>\n

Some of these companies have recovered faster from Covid than many in the market anticipated, said Kaitlin Byrne, a Cape Town-based equities fund manager at the firm. They offer an alternative for investors to the Johannesburg market\u2019s large resources segment, she said in an interview.<\/p>\n

\u201cPeople have under-estimated the ability of earnings\u201d to rebound, said Byrne. \u201cGiven the valuations we are seeing, it is more difficult deciding which stocks to exclude from our portfolios than finding good ideas.\u201d<\/p>\n

South Africa\u2019s economy is back at\u00a0the size\u00a0it was before the pandemic struck, after expanding 1.9% in the three months through March, a potential boost for the financial sector. While the country\u2019s main stock index slipped 10% in the first half, that was a better performance than the benchmark for emerging-market shares, which slumped twice as much.<\/p>\n

Still, there are domestic threats to the outlook for South African stocks, beyond global concerns of a potential recession. Record rolling power blackouts imposed by struggling state-owned utility Eskom threaten to disrupt the economic rebound, while the gloomiest consumer mood in decades may curb household spending.<\/p>\n

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The Foschini Group is an example of a company that has bounced back from Covid better than anticipated. Sentiment around the Cape Town-based retailer just after Covid signaled \u201ca very slow trajectory, but earnings came back a lot faster than the market had priced in,\u201d Byrne said. The company swung from a loss to a profit when it reported full-year earnings on June 10.<\/p>\n

In the case of luxury retailer Richemont, down almost 30% in Johannesburg trading this year, the market attached low multiples to its jewellery businesses and weakness in its shares provided an opportunity to acquire \u201cvery strong brands at cheap valuations,\u201d she said.<\/p>\n

Mobile phone giant MTN was valued by some purely on its South African operations, with a larger-than-justified discount on its businesses elsewhere because of regulatory and other risks, Byrne said. MTN\u2019s attractiveness was increased by its businesses in Nigeria – its largest market – and Ghana, which are currently growing above 20% annually, she said.<\/p>\n

\"\"<\/a><\/p>\n

Banks have outperformed the broader market, with an index for the sector rising more than 5%, as prospects of an economic recovery and higher rates buoy sentiment. M&G\u2019s Equity Fund, managed by Chris Wood and Yusuf Mowlana, includes three banks among its 10 largest holdings, data on the firm\u2019s website show: Standard Bank, Absa, and Investec.<\/p>\n

Johannesburg\u2019s benchmark FTSE\/JSE Africa All Share Index climbed 1.4% by 11h23 local time on Monday, poised to snap three days of declines.<\/p>\n

\n

Read: A look at South Africa\u2019s new R210 million mall \u2013 that includes the first Rocomamas drive-thru<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The South African unit of M&G, the UK fund manager overseeing more than $390 billion in assets, sees opportunities in investing in the nation\u2019s industrial and financial companies as earnings growth may surprise.<\/p>\n","protected":false},"author":59,"featured_media":600662,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[26],"class_list":["post-602742","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/602742","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=602742"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/602742\/revisions"}],"predecessor-version":[{"id":602752,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/602742\/revisions\/602752"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/600662"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=602742"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=602742"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=602742"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}