PRETORIA, April 20 – South African equities are attracting renewed interest from investors seeking value opportunities as geopolitical tensions weigh on global markets.
Ninety One Plc said the conflict involving Iran has triggered market volatility that is pushing stock prices below levels justified by their earnings outlook. Despite pressure on sentiment, earnings expectations across the market have remained relatively stable.
Data shows that the 12-month forward earnings-per-share for the FTSE JSE All Share Index has declined by about 4% since the start of the conflict. However, the benchmark index itself is still down more than 5% over the same period, marking a reversal after a record 12 consecutive months of gains through February.
The decline has been led by the precious metals and mining sector, which makes up roughly a quarter of the index. The sector has fallen 13% since early March, as gold and platinum prices weakened amid a broader selloff in emerging markets.
Investor concerns have centered on rising oil prices and the potential for higher inflation, which could prompt central banks to tighten monetary policy further.
Even so, portfolio managers maintain that underlying fundamentals remain intact. Key long-term drivers, including demand for critical minerals, supply constraints in commodities, and continued investment tied to artificial intelligence infrastructure, continue to support the market outlook.
A recent Bank of America survey showed that 81% of fund managers see more buying than selling opportunities in South African equities, up from 69% previously. In addition, half of respondents consider the market undervalued, while positioning is shifting away from cash into local stocks.
