The Money Show’s Bruce Whitfield interviewed Ashburton Chief Investment Officer Paolo Senatore.
The first thing we need to do, says Senatore, is differentiate between historically low and even negative interest rates in many developed markets and relatively higher rates domestically.
Rates have been structurally low in developed markets since the financial crisis of 2008. They are likely to remain lower for longer due to concerns about growth, amplified by Brexit.
This environment tends to be supportive of equity market ratings through elevated price-to-earnings ratios as investors are willing to tolerate lower yields. Look for defensive companies with strong balance sheets and decent dividends to outperform.
While bond yields in developed markets trend toward the negative; emerging market bonds (including our own) become attractive in what is known as the “Hunt for Yield”. This has already begun to play out with strength in the local bond market.
Locally interest rates have been increasing from the beginning of 2014 when prime was at 8.5% to today’s rate of 10.5%. This, coupled with lower growth and a number of other factors, has put tremendous pressure on the consumer and business in general. There are early indications that the rate hiking cycle in South Africa may well be coming to an end, but investors should be cautious as growth expectations remain subdued.
- Having said that, the sectors that have borne the brunt of the difficult environment would naturally become beneficiaries if the Sarb reduces rates. Here one would look at banks and financials in general, which are trading at relatively low multiples, credit retailers and South African focused industrials. Investors should exercise prudence and patience as the broad based economic outlook remains fragile.
Listen to the audio below for more detail.
There’s an outpouring of emotion on the streets of Harare. Bruce Whitfield interviews Rashweat Mukundu.
Ad guru Andy Rice knocks Misohawni, but praises outdoor living retailer REI for closing all 151 of its stores on Black Friday.
The Money Show’s Bruce Whitfield interviews Werksmans Attorneys Director Dr Eric Levenstein.
How much would Naspers be worth without Tencent? Bruce Whitfield interviews Old Mutual Investment Investment Analyst Philip Short.
The Money Show’s Bruce Whitfield interviews Committie about his attitude to money (hopes and fears, successes and failures, etc.).
Ian Mann reviews “The Reputation Game: The Art of Changing How People See You” by David Waller and Rupert Younger.
Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.
Monday (March 27) is your last chance to sink your teeth into the popular burger special which Spur will discontinue from April.
Start your Christmas shopping off with a bang at these major retailers offering some impressive discounted sales for Black Friday.
Flux Trends founder Dion Chang gives five reasons why he believes getting a degree is past its sell by date.
WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...
Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?
The National Student Financial Aid Scheme (NSFAS) will pilot a new funding model in 2017. NSFAS chairperson Sizwe Nxasana explains.