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Dowdy sectors prevail

Jun 02 2010 15:33 Marc Hasenfuss

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There's something distinctly “unsexy” – and quite surprising – about the top rankings in our latest McGregor-BFA weighted composite financial index.

The top three sectoral rankings – non-life insurance, life assurance and general industrials – wouldn’t exactly be described as the JSE’s hot-to-trot sectors.

But those so-called “sexy” sectors – pharmaceutical/healthcare, technology and the retailers – are actually found a good way down the rankings.

Dowdy does best

The ranking of non-life assurers perhaps isn’t that surprising, considering the handful of counters that make up that index.

It’s really Santam and Mutual & Federal (which will delist soon after a buyout offer from parent Old Mutual) that carry the sector.

Runner up sector – life assurance – is also not terribly surprising, considering most of the listed companies are of (relatively speaking) good quality, at least in terms of financial position and financial performance.

Third placed general industrials might be seen as a triumph of the “smokestack industries”.

The truth is, so-called “old economy” companies tend to stand out in tough economic times – really by virtue of the fact many are conservatively managed and tend not to over-gear in good times.

Interestingly, the non-life insurance and life assurance sectors were also among the top performing sectors in our 2008 Top 200, when the McGregor-BFA financial ratio index made its debut.

Personal goods enjoyed a high ranking this year – thanks, no doubt, to Richemont’s influence over this niche sector.

Other strong showings were seen in software & computer services, household, home & construction, financial services, fixed line telecommunications (Telkom), electronic and electrical equipment (mainly Altron and Reunert), as well as equity investment instruments (which includes empowerment giants HCI and Brimstone).

Steady as she goes

The AltX  – which topped last year’s table – retained a very reasonable 15th place.

Fairly surprising, we suppose, if you consider ructions evident in so many of this junior board’s listings.

Last year we saw – also surprisingly – automobile & parts was one of the top sectoral rankings, despite the fact the vehicle industry worldwide was in an ugly slump after the global financial meltdown in 2008.

This year the full effect of the stalled vehicles/parts sector came through with the JSE’s automobile & parts board ranked second to last.

A lowly ranking for the industrial engineering sector is perhaps also understandable, considering various companies exposed to the auto, building and mining sectors.

 - Finweek

To view the McGregor BFA Index, click here
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