Money and Markets

‘South Africa is coming back.’ Almost half of Bank of America’s top EEMEA shares for 2020 are listed on the JSE

Business Insider SA
Exchange Square in Johannesburg where Deutsche Ban
Exchange Square in Johannesburg where Deutsche Bank's South African headquarters are situated.
  • Bank of America Securities has taken a bullish view on the South African market.
  • Eight of its twenty top EEMEA (Eastern Europe, Middle East, Africa) shares which offer value- as screened by quantitative measures like valuations, earnings growth and dividends - are from South Africa.
  • These include Sibanye, Angloplat, Gold Fields, Harmony, African Rainbow Minerals and Implats, which already jumped 290% in 2019.
  • For more stories, go to Business Insider SA.

In a research note headlined “South Africa coming back”, Bank of America Securities takes a bullish view on the local market.

The investment house believes the Moody’s downgrade of South African bonds to “junk” is already priced in and that the Reserve Bank will finally cut interest rates after the February budget.

South African shares are moving higher on its “top-down” quantitative rankings as well. Using six screens – including current valuations, current versus historic valuations, earnings growth and dividends – Bank of America has singled out twenty shares across the EEMEA (Eastern Europe, Middle East, Africa) markets which offer value.

Almost half of these shares are from South Africa: Sibanye, Angloplat, Implats, Gold Fields, Harmony, African Rainbow Minerals, the financial holding company RMI and the property group Fortress Income Fund.

Source: DataStream, FactSet, Bloomberg, Bank of America Global Research This screen is not a recommended list either individually or as a group of stocks. Investors should consider the fundamentals of the companies and their own individual circumstances/objectives before making any investment decision. Green shaded equities are BUY-rated stocks by Bank of America's fundamental analysts.

“(South Africa’s) higher ranking is driven by earnings growth and strong momentum,” says Bank of America Securities.

From a country perspective, Turkey remains at the top of Bank of America’s ranking thanks to its solid valuations compared to historic levels and strong dividends, among other factors.

This graph depicts whether companies are faster/slower growth, and available at more expensive/cheaper levels. are Source: IBES, DataStream, BofA Global Research

The JSE had a pretty solid 2019, with the all-share index up 8% - including dividends, the total return was 12%, which handily outperformed inflation (currently 3.6%). But the local market trailed global shares, with key US indices up almost 30%.

The top performers in the local market were all mining shares, with Implats up by more than 290%. Retailers and other South African-focused companies had a tougher time, with Shoprite losing a third of its value.

The article has been corrected to reflect that SA shares were singled out among EEMEA (Eastern Europe, Middle East, Africa) investments.

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