From SA Inc, to green and gold. In the latest episode of No Ordinary Wednesday, discover the sectors that have piqued the interest of award-winning fund managers, Barry Shamley and Peter Vogel, and the factors driving their local and international investment decisions.


Anticipated interest rate cuts could spark billions in inflows to equity funds globally, but where will this money be directed, and can SA Inc get in on the action?

In the latest episode of the No Ordinary Wednesday podcast, Investec Investment Management fund managers, Barry Shamley and Peter Vogel discuss international and local equity markets and the impact of the current macroeconomic conditions.

The pair heads up the Investec BCI Dynamic Equity Fund which has won the best South African general equity fund for straight performance over three years and for risk-adjusted performance over five years at the Raging Bull Awards.

US market outperformed

Turbulent economic conditions have characterised the global stage over the past two years underscoring the dichotomy within equity markets, where certain regions and sectors have thrived, while others have languished.

The US market, buoyed by its “Magnificent Seven” tech giants (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla), Shamley notes, has outperformed, with shares in these companies up a staggering 125% on average last year. “Market leadership has narrowed over the last two years and companies with an AI growth theme have done exceptionally well.”

This led to a stellar performance of the MSCI World Index that captures large and mid-cap representation across 23 developed markets. “If you're a general equity fund that invested roughly a third of your money into MSCI World, you would have almost doubled that return,” says Shamley.

There have also been another couple of interesting sector anomalies globally. “Companies in the luxury goods sector have done surprisingly well, despite the very tough economic environment and more recently gold - but it’s a very difficult market to navigate,” he says.

Vogel adds: “Gold's been a great hedge for portfolios in an environment of stubbornly high inflation as well as growing geopolitical risks.”

SA Inc looking attractive to investors

Locally, South African equity funds have not escaped the pinch of the unfavourable macroeconomic landscape, negative investor sentiment towards the SA economy and structural issues including electricity and logistical challenges.


Barry Shamley
Barry Shamley , Investec BCI Dynamic Equity Fund Manager

We are coming out of a perfect storm for SA businesses. This is this sort of environment that as contrarians gets us quite excited about pure play SA companies which are trading at extremely depressed valuations


Globally, all eyes on are the US making the first move when it comes to interest rate cuts. “While the headwinds above may impact another reporting period, our research team have concluded that based on past cycles, SA Inc tends to outperform in the period post the interest rate cycle peak,” adds Vogel.

What is SA Inc.?
SA Inc. stocks are companies whose earnings are predominantly linked to the South African economy and span all sectors including retail, manufacturing, food producers, financial services, property, mining and telecoms.

“We've got some great companies run by some terrific businessmen who are accustomed to navigating a very difficult environment in South Africa. They see the opportunity where others see problems,” says Vogel.

A Chinese rebound is also on the radar of Investec’s Investment Management team. “They’ve been through a very tough environment because of their overdevelopment in the property sector, but that's starting to unwind now. The government is also becoming more conscious of the impact that erratic policies can have on foreign investor sentiment.”

Shamley expects rate cuts and China's recovery to boost commodity demand, benefiting South Africa as a major resource exporter.

Emerging market vs developed market performance

Emerging markets equities have struggled in the last year due to the economic headwinds and the operating environment. However, India has been an outlier performing better than its peers. “India seems to have benefited from a government that enables business and has also seen significant investment from flows exiting China,” says Vogel.

LEARN MORE: India: the next global superpower

In stark contrast to EM equities, developed markets thrived. “The standout performer last year was undoubtedly developed market equities and in particular the tech-heavy indices,” says Vogel.



Peter Vogel
Peter Vogel, Investec BCI Dynamic Equity co-Fund Manager

Some of the key contributors to the underperformance of emerging markets versus developed markets were weak performances from China and Russia specifically, as well as a stronger dollar.


Local sectors showing promise

Gold remains the top performer in local equities, says Shamley. “We're seeing very strong demand for gold, but not from your traditional sources. We've noted exchange-traded fund outflows, and it appears that it's sovereign investment that's been driving the price.”

What are Exchange-Traded Funds?
ETFs, or exchange-traded funds, are funds that trade on exchanges and typically follow specific indexes. Investing in ETFs allows you to buy and sell a bundle of assets during market hours, which can reduce risk, increase diversification, and lower exposure in your portfolio.


Green energy also has the attention of investors due to the commodity intensity of the transition to net zero. “Many people forget the energy intensity of AI and with companies and countries having made net zero commitments, all of that new energy demand from AI and from data centres is going to have to come from renewables, which is going to lead to a demand for green metals such as copper,” says Shamley.

The new two-pot retirement system – a reform that will allow retirement fund members to make partial withdrawals from their funds before retirement – could also boost local consumption, adds Vogel: “This has got us interested in domestic retailers in South Africa in the short to medium term.”

Couple this with interest rates, hopefully having topped out, and the team believe that the consumer discretionary space is looking increasingly attractive.


Podcast key moments:

00:00 – Introduction

01:20 - How are macroeconomic and geopolitical conditions affecting global equity funds?

02:24 – How are equity markets fairing in South Africa despite global headwinds?

03:57 – Are South African investors optimistic about local equity funds?

04:54 – How is rand volatility affecting equity markets?

06:13 – Equity markets to watch out for 2024

07:57 – Emerging markets equities vs developing markets equities?

09:05 – What are emerging markets equity funds investing in?

10:02 – How is South Africa performing against other emerging markets?

10:58 – Is SA Inc attractive to investors?

11:37 – Are there significant inflows in tech and AI in South Africa?

12:25 – What sectors in South Africa are attractive to investors?

14:14 – What sectors are growing in South Africa?

15:24 – Impact of investing in South Africa

17:20 – What will drive the investment outlook for the next 12 to 18 months?



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