On paper, at the time of writing, the chances looked pretty OK for a good year in investing.
Politics can be fickle, we know. Things can fall apart, and they tend to do that with alarming alacrity.
The government of national unity is a tenuous construct. But gut feel is that the longer this assemblage manages to hold together, the stronger the binding will become — which might yield a firmer (and more convincing) economic growth narrative.
Already the extended period we have had without the power grid going on the fritz is encouraging. If we get an interest rate cut soon, and there is a semblance of order restored at our ports and our rail infrastructure … you just never know how things might pan out for investors.
The market seems, at this juncture, cautiously optimistic — remembering that big South Africa Inc stocks, like the banks and financial services providers, have bounced off the very low levels of the past couple of years. Foreigner investors, it seems, are starting to nibble, and possibly some of the capital that fled South Africa last year might return in search of good value on the JSE.
Will the laggards in the small- and mid-cap space be targeted for takeover?
Remgro, perhaps the best proxy for South Africa Inc sentiment, is up about 15% over three months — though one can’t entirely dismiss the argument that the investment company is merely recovering from self-induced structural dents.
While we all hope the JSE will take still bigger strides upwards, it does seem that some opportunists are not waiting too long to pounce. The offers to buy out minority shareholders in Bell Equipment and out-of-favour financial services boutique Sasfin might be very smart moves if the local economy does regain proper and prolonged traction.
No doubt more will follow, with great swathes of the JSE’s mid- and small-cap sectors still offering enormous value, even if the better-known counters have enjoyed a spurt over the past three months. Last time I looked, the mid-cap index was up about 12% and the small-cap index by about 15%.
Will the laggards in the small- and mid-cap space be targeted for takeover? A dose of corporate action could really make things interesting on the JSE.
Considering the conservative balance sheet management by listed counters over the past few years, there certainly are enough well-armed war chests to pursue well-thought-out corporate conquests.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.