Is it time to buy shares?

Johannesburg - Head of retail sales at Stanlib, Paul Hansen, said that there are tentative signs of value in the local equity market and that it may be time to consider "quietly buying". But he highlighted that it is very difficult to predict anything in the current very volatile environment.

"The question is how long the economy takes, and people do expect economies to take longer. But hopefully we are close to the end and there certainly seems to be value," he said.

Hansen pointed out that equity markets generally started recovering ahead of the economic turns as they were forward-looking.

"I lived in the US for nine years and wouldn't have dreamed this could have happened, but it did," he said, when referring to the crisis that had lopped 37% off the S&P index this year - the worst performance since 1937.

He said that the world volatility index was at an all-time high of 82, but added that when it previously hit all-time highs it was a good buying opportunity.

"Price-earnings ratios of 8.3 in South Africa are very cheap and with dividend yields of 5% it looks like a good buying opportunity," he said.

He also said equities looked cheap relative to 10-year government bonds.

"Anglo and Sasol could be ready to bounce," he noted, after analysing both company's earnings and dividend dynamics.

Hansen highlighted one "hope" going forward as the projected US$2.2 trillion in infrastructure spending over the next three years in emerging markets.

"There may be some concerns over offshore financing, but it certainly looks powerful," he concluded.

- I-Net Bridge