South African Assets Attract Fresh Investor Interest

South Africa investors see buying opportunities

Investor sentiment toward South Africa has improved as concerns over stagflation ease, according to a Bank of America Global Research survey released on Monday.

The survey, conducted from June 5 to June 11 among 14 fund managers, found that a net 93% of respondents saw more buying opportunities than selling opportunities in South African markets.

Bank of America said the reading was the highest level of optimism recorded since 2009.

The change in sentiment followed a decline in inflation concerns after global oil prices fell sharply from their May peaks. Lower oil prices can reduce pressure on consumer prices in countries that import fuel.

Fund managers also increased exposure to mining stocks, with allocations to the sector reaching their highest level in five years.

The mining sector remains a major part of South Africa’s economy and financial markets.

Despite the improved inflation outlook, all respondents in the survey said they expected the South African Reserve Bank to raise interest rates in the third quarter.

South African government bonds also drew investor attention. A net 29% of fund managers described 10-year government bonds as undervalued.

Deutsche Bank analysts said the rand could reach 16 to the U.S. dollar by the end of 2026, citing trade, monetary policy and political conditions.

It was not immediately clear whether the improved sentiment would result in sustained foreign inflows.

SOURCE: Reuters