PSG Wealth CIO, Adriaan Pask<\/figcaption><\/figure><\/div>\n\n\nPask said that against this backdrop, acting on research and investing in ‘out-of-favour areas’ requires courage but can yield significant returns.<\/p>\n\n\n\n
“South African assets exemplify this principle, offering compelling opportunities despite current market sentiment,” he said.<\/p>\n\n\n\n
PSG Wealth analysts interrogated the risks, potential consequences, and probabilities of various outcomes.<\/p>\n\n\n\n
He said that they concluded that markets were likely overpricing bad news<\/strong>, and in the end, “not only was there no bad news, but there was also considerable good news<\/strong>.”<\/p>\n\n\n\nPask said that this highlights two key lessons: <\/p>\n\n\n\n
\n- The importance of following the research; and<\/li>\n\n\n\n
- The value of diversification.<\/li>\n<\/ul>\n\n\n\n
“South African assets have shown strong performance across the board,” said Pask.<\/p>\n\n\n\n
He said that equities have posted solid returns, bond yields have fallen with long bonds, and listed property companies, while slow to recover from COVID losses, have performed well. <\/p>\n\n\n\n
Banks and local retailers have also shown strong results.<\/p>\n\n\n\n
For now<\/strong><\/p>\n\n\n\nDespite the positive prospects now, Pask highlighted three key challenges ahead: rising global government debt, inflation, and inflated asset valuations.<\/p>\n\n\n\n
He said that US government debt is a concern, as heavy borrowing against future growth risks escalating costs if expected growth does not materialise. <\/p>\n\n\n\n
Persistent inflation is increasing government financing costs, with interest bills now exceeding $1 trillion, diverting funds from productive investments. <\/p>\n\n\n\n
Additionally, market valuations in the US show signs of excessive speculation, fueled by retail investors, cryptocurrencies, and leveraged ETFs, suggesting an unsustainable surplus of speculative capital.<\/p>\n\n\n\n
The PSG Wealth CIO said that many private equity firms with deep pockets now face significant reinvestment risk. <\/p>\n\n\n\n
“As their earlier investments mature, they are pressured to deploy capital, often into lower-quality opportunities with near-term challenges,” said Pask.<\/p>\n\n\n\n
“This cycle of forced reinvestment into suboptimal assets is a key concern moving forward,” he added.<\/p>\n\n\n\n
Looking ahead to 2025<\/strong><\/p>\n\n\n\nOverall, PSG Wealth sees South African equities as “a broad area of opportunity.”<\/p>\n\n\n\n
“Currently, share prices are catching up to earnings after prolonged pressure, particularly within the banking sector, though not universally,” said Pask.<\/p>\n\n\n\n
He added that the bond market also shows potential, with room for yields to drop. <\/p>\n\n\n\n
But, much will depend on the February National Budget Speech to avoid unsettling rating agencies. <\/p>\n\n\n\n
On the offshore front, the focus is on the US, though China presents opportunities with risk considerations. <\/p>\n\n\n\n
The investment expert said that the UK, often overlooked, is expected to see a rebound as investors reassess valuations, potentially redirecting capital back from the US, creating new opportunities.<\/p>\n\n\n\n
Less concerned than this time last year<\/strong><\/p>\n\n\n\nPask said that while risks remain, they have slowed, reducing the likelihood of negative outcomes.<\/p>\n\n\n\n
Conditions have improved, with meaningful upside potential still available.<\/p>\n\n\n\n
“Overall, we\u2019re in a much better position, which is encouraging,” said the PSG Wealth CIO, adding that “the South African market is the most exciting part of the portfolio right now.”<\/p>\n\n\n\n
The rand still has potential for recovery, and given the strength of the dollar, Pask said that investing offshore may seem less appealing in the short term, as a stronger rand could reduce returns.<\/p>\n\n\n\n
“Patience will be key for offshore investments, but for now, South Africa offers a promising investment landscape,” said Pask.<\/p>\n\n\n\n
\n\n\n\nRead: How much you would have if you invested R1,000 in Coronation, Ninety One, Momentum and more at the start of 2024<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"PSG Wealth CIO Adriaan Pask sees a promising investment landscape in South Africa, coming off the back of a shock outcome to the national elections and the surprise emergence of the GNU.<\/p>\n","protected":false},"author":101,"featured_media":704955,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26,7532,11232,21110],"class_list":["post-801649","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline","tag-market","tag-psg-wealth","tag-swouth-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801649","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\/101"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=801649"}],"version-history":[{"count":10,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801649\/revisions"}],"predecessor-version":[{"id":801774,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/801649\/revisions\/801774"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/704955"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=801649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=801649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=801649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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