South African investors are the most bullish on the nation’s bonds since 1999. The survey was conducted by Bank of America and based on the views of 14 fund managers.
- Bonds have become preferred over equity and cash.
- The results were published just hours before the central bank left interest rates unchanged.
64% of managers say bonds are undervalued, an elevated reading. - South African local-currency bonds have handed investors losses of 2.2% in dollar terms in the year-to-date.
- The bonds have rebounded in the past two months, handing investors total returns of 17% since the end of May.
- A remarkable 64% of fund managers believe that bonds are undervalued, and an equally impressive 64% see buying opportunities in equities. The market is abuzz with excitement as the All-Share index reaches 84k (84k last month), with total returns of 13% for equities and 15% for R2032 bonds.
- The research indicates that the recession fears have faded away, and the outlook for the economy has turned positive. A net 21% of respondents expect the economy to strengthen in the next 12 months, the highest reading in 15 months.
- Corporate interest in renewable energy is soaring, with projections suggesting the addition of approximately 5GW in renewables by 2025. This surge in interest has been bolstered by a decline in loadshedding winter fears.
- The report highlights potential risks concerning State-Owned Enterprises (SOEs) and weak earnings per share (EPS). These factors have caught the attention of managers, prompting a more cautious approach.
- : The next 12 months are predicted to be highly favorable for banks, healthcare, and tobacco sectors. Conversely, gold, real estate, and beverage sectors are expected to witness comparatively weaker performance.
- Other banks have also noted that the recent selloff in the nation’s bonds presented a buying opportunity.