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Johannesburg - Absa Investments this week said it had singled out clothing retailers Mr Price and Woolworths and food retailer Shoprite as its preferred retail stocks.
Chris Gilmour, an equity analyst at Absa Investments, speaking at a presentation in Johannesburg, said he was upbeat on these shares, because Africa’s economic growth would prop up these shares.
Africa has many countries that are among the world’s top 10 rapidly growing economies, powered by the growing middle classes in those countries.
Many South African retail firms have Africa in their future expansion plans and others have already set up shop in a number of countries on the continent.
South Africa’s retail sales growth was, however, exposed to internal cost input jolts, because of the weaker rand against a basket of currencies and higher food and fuel prices, said Gilmour.
The more limp local currency would, in his view, bolster rand hedge shares like those of British American Tobacco (BAT), brewer SABMiller and luxury goods firm, Richemont.
“Other stocks that should benefit from a weak rand include Sasol and tourist-related stocks such as (hotel groups) City Lodge and Tsogo Sun,” said Gilmour.
He said building firms were still struggling to deal with the continuing negative publicity around the revelation of anti-trust conduct in the sector.
Last week, Roger Jardine, the former Aveng CEO, described the construction sector in South Africa as the largest corporate shame in South Africa’s post-apartheid era.
In addition to this, there has been little or no evidence that these companies’ order books are mirroring the government’s multi-billion rand infrastructure expenditure.
“We see a very dim outlook for gold mining stocks and even the gold ETF has lost its lustre…,” Gilmour said, adding Absa Investments has recently moved from the gold ETF to the platinum ETF.
“Conglomerate stocks such as Imperial, Barloworld, Bidvest and Remgro may find it difficult to perform against a relatively weak economic background.”
- Fin24
Chris Gilmour, an equity analyst at Absa Investments, speaking at a presentation in Johannesburg, said he was upbeat on these shares, because Africa’s economic growth would prop up these shares.
Africa has many countries that are among the world’s top 10 rapidly growing economies, powered by the growing middle classes in those countries.
Many South African retail firms have Africa in their future expansion plans and others have already set up shop in a number of countries on the continent.
South Africa’s retail sales growth was, however, exposed to internal cost input jolts, because of the weaker rand against a basket of currencies and higher food and fuel prices, said Gilmour.
The more limp local currency would, in his view, bolster rand hedge shares like those of British American Tobacco (BAT), brewer SABMiller and luxury goods firm, Richemont.
“Other stocks that should benefit from a weak rand include Sasol and tourist-related stocks such as (hotel groups) City Lodge and Tsogo Sun,” said Gilmour.
He said building firms were still struggling to deal with the continuing negative publicity around the revelation of anti-trust conduct in the sector.
Last week, Roger Jardine, the former Aveng CEO, described the construction sector in South Africa as the largest corporate shame in South Africa’s post-apartheid era.
In addition to this, there has been little or no evidence that these companies’ order books are mirroring the government’s multi-billion rand infrastructure expenditure.
“We see a very dim outlook for gold mining stocks and even the gold ETF has lost its lustre…,” Gilmour said, adding Absa Investments has recently moved from the gold ETF to the platinum ETF.
“Conglomerate stocks such as Imperial, Barloworld, Bidvest and Remgro may find it difficult to perform against a relatively weak economic background.”
- Fin24
