MORE FUND MANAGERS OPTIMISTIC ABOUT SA GROWTH

THE OCTOBER survey of South African Fund Managers by Merrill Lynch Bank of America showed that more fund managers were optimistic about growth. The percentage bullish on growth over the next 12 months rose to 60 percent from 30 percent in September and only 20 percent in August. Nevertheless, the October percentage was still below the 85 percent of the January survey, when the February and March load shedding had not yet taken place. Fund managers had taken a very dim view of the pace of reform and in both August and September not a single fund manager saw reform accelerating. That improved in October to a third seeing some acceleration, but two thirds want to see more tangible progress. “Managers expect a tough midterm Budget, but do not see prescribed assets being introduced,” the survey said. Fund managers think monetary policy is too restrictive with close to two thirds expecting a repo rate cut at next month’s Monetary Policy Committee meeting. Although the SA Reserve Bank cut the repo rate in July, this merely reversed the November 2018 increase. Several central banks have cut their policy rate around the world. This global slowdown has resulted in fund managers choosing to keep their money in cash as they expect earnings to slow, which will lower the value of equities. “On a 12-month view, managers are cash and bond bulls and equity and commodity bears. They are overweight in local cash and want to invest offshore. Offshore cash is a survey high of 10 percent,” the survey said.