EXPECTED RETURN GROWTH
With the JSE All Share Index returning a palatable 21.4% for 2013, albeit lower than the 26.7% for 2012, analysts have warned investors to tame their return expectations going forward.
Silverman says that the next five years could be very tough for local markets – valuations are high, and off these levels, future returns have tended to be low.
He adds that an even weaker than expected rand, though, could mitigate the weakness, ensuring a more flat All Share performance, rather than a sharp fall.
Vintcent says for South Africa to turn this corner, the country needs a stronger productive element – either from the mining or construction sectors. He says the growth catalyst that needs to be unlocked is the country’s multibillion-rand infrastructure development roll-out. The details of the roll-out are expected to be revealed by finance minister Pravin Gordhan when he tables his 2014 Budget Speech on 26 February.
It seems, therefore, that caution and focus on valuations and quality of assets should be top of mind for investors, whether or not one is a buyer of defensive stocks.