Money manager upbeat

Bloomberg

Investec Asset Management’s Chris Freund is among equities investors who are expecting SA’s growth to surprise to the upside.

President Cyril Ramaphosa is spurring optimism among stock traders who are already noting changes in the market. “People are going to be surprised how South African growth rates are revised upwards,” said Freund. “We are bulls on South Africa’s economy.”

Freund isn’t alone. Morgan Stanley upgraded SA equities to overweight on Wednesday and said its forecasts for economic growth are above consensus for this year and next. Business confidence is recovering and political risk has fallen since Ramaphosa replaced Jacob Zuma as president, with private investment and household consumption heading higher.

Further, valuations are attractive: stocks traded on the JSE are at their cheapest since February 2010 on a price-to-earnings basis, Morgan Stanley said.

The improving confidence and economic outlook are conditions Freund is looking to make the most of for the R23 billion Discovery Invest Balanced Fund, the flagship mutual fund he helps manage.

Here are Freund’s views on some key factors influencing SA equities:

Naspers:

While the share has dropped 14% this year, “Naspers we’re always going to like. We think Tencent is an astonishingly good company.”

Mining regulations:

“There’s a lot more pragmatism around it and that the final version will be a pragmatic approach, which recognises the need for transformation ... [and] tries to balance time frames and business realities”.

Steinhoff International:

“There’s no doubt that corporate governance has a much higher importance now than it did a year ago, essentially because people have had a very vivid example of how much damage bad corporate governance can do.”