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Investec downbeat on SA shares

Johannesburg - After sharp gains in 2010 that pushed asset valuations to unjustifiably high levels, South African equities are unlikely to offer much value in the next few years, Investec Asset Management said on Thursday.

"If you have an expectation that you will get inflation plus 3% on the JSE, the odds are not in your favour," Clyde Rossouw, a portfolio manager who helps manage $90bn in assets at Investec, told reporters.

The JSE All-share index, the broadest measure of the stock performance of the local bourse, rallied 16% in 2010, a year investors favoured high-risk emerging assets over underperforming developed markets.

But the index is virtually unchanged so far this, after hitting a record high in February, stoking fears that prices had run up too quickly.

The money manager, a unit of Anglo-South African bank Investec [JSE:INL], is also limiting its exposure in commodities, whose rising prices Rossouw said are "an accident waiting to happen".

Goldman Sachs, a long-time commodities bull, also painted a bleak picture for commodities, saying this week prices had gotten ahead of fundamentals.

Investec, winner of Lipper's 2010 UK Best Fund Group Overall-Large award, is bullish on global consumer goods such as British American Tobacco [JSE:BTI] and Coca-Cola.

"The biggest opportunity we foresee right now is to buy the large global consumer goods, whose share prices have gone nowhere despite the fact that their earnings performance has been really good," said Rossouw, whose balance Opportunity Fund has R12.5bn under its custody.

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