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Goldman analysts say go long on Russia, South Africa stocks

Commodities companies in Russia’s MOEX and SA’s JSE Top 40 indexes are among the most likely to benefit as commodity prices bounce back.
Image: Moneyweb
Goldman Sachs recommends snapping up equities from South Africa and Russia, which tend to outperform their emerging-market peers when both U.S. real yields and commodity prices rise.Valuations are attractive in both nations, offering money managers a chance to get ahead of a rebound in risky assets as vaccine distribution ramps up and leads to a comeback in economic growth, according to New York-based strategists Ron Gray and Caesar Maasry.

“We remain bullish on the global growth path (and the pass-through to commodities prices) as vaccine distribution ramps up, and would recommend that investors use this as an opportunity to re-engage in pro-cyclical trades,” they wrote in a Friday note. “Local equity indices in South Africa and Russia are good candidates.”

The relatively high market share of commodities companies in Russia’s MOEX and South Africa’s JSE Top 40 indexes also means they are among the most likely to benefit as commodity prices bounce back from a recent reversal, the analysts wrote.

An additional perk is that rising yields are often more painful for long-duration, growth stocks, such as those more commonly from China, they wrote. While risk lingers that geopolitical tension between Russia and the U.S. may escalate or that the pandemic could worsen, the firm expects a global reopening to drive market strength.

© 2021 Bloomberg L.P.

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Free public advisory from Goldman is snake venom. Follow like lemmings and feed the slime demon.

Why would anyone give free advise on how to make money?

I suspect they are looking for buyers for their stocks.

This is at least the third bullish forecast on SA I’ve seen from Goldman’s in the last decade, or as Cyril called it – the lost decade. Either these guys have lost big on their bets or are talking up one thing and doing another.

If you stick to your story when predicting the market and you will be right. A broken clock is accurate twice in 24 hours.

Agree with both these comments….anything that comes out the mouths of Goldman’s is not to be trusted….in my opinion!

GS had a partner MD in Joburg who was an art collecting, former architect and very pro government. He sold himself very well on tales about SA growth, deep value shares and is probably the force behind this rubbish.

The JSE minus Naspers, Prosus, BHP Biliton, Richemont, BATS, Anglos, Mondi, Glencore and AB Inbev(which are offshore businesses) is probably less than 0,5% of the MSCI world, and the remaining companies are too small and illiquid to count.

Better value in small/mid cap Asian and US markets-less country and currency risk and way more growth- plus rule of law

How dare foreigners become positive about SA, this is our turf and we are the world champs of pessimism. We’ll cut those positive foreigners down by the knees, we are not going to let anyone take us out of our groove.

MSCI SA Index 1year USD return 84%

S&P Index 1year USD return 51%

By the time the pessimist wake up it’ll be three years since the bottom

You haven’t added in the circa 4-6% depreciation of the rand (per year!)

Yes I have, USD return stated

Sorry Goldman, you’re a couple of months too late. The SA share prices have already rocketed. Cheap money has already found its way to EM countries. Greed has taken over all the financial markets. Foreigners have created the biggest asset bubble in history. First the US and other developed markets were cranked up and now that those markets are at record levels, greedy speculators are doing the same to EM markets. Be very careful! Just one risk event to collapse the house of cards.

Forgive me for not believing a company that knowingly sold junk bonds and products in the “credit crisis” of 2007/8 – then went off the pay massive bonuses after being bailed out with cheap credit and tax payer money.

End of comments.

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