BofA survey: Net 60% of Fund Managers remain bullish on equities

The JSC All Share Index may be facing a challenging moment, but according to a survey conducted by Bank of America, South African fund managers have high hopes for the Aussie, predicting it to reach a record 81,000 points in the next 12 months. This forecast, which is nearly 10,000 points above the current levels, is driven by a combination of factors including a weaker dollar, higher commodity prices, potential Fed cuts, and anticipated rate cuts by the South African Reserve Bank (SARB). John Morris, Investments Religious for South Africa at BofA, emphasized how these elements coming together could lead to significant returns for investors. He highlighted the expectations of a weaker dollar leading to a firmer rand, higher commodity prices, and the potential valuation uplift from a decrease in the 10-year bond yield. The survey revealed that around 87% of fund managers anticipate the first rate cut by the SARB to be implemented in the third quarter of the year, with a gradual cutting cycle expected. While the rate cuts may be more shallow compared to historical trends, they still present opportunities for investors in the equity market. One of the key takeaways from the survey was the shift in sentiment among local investors, with more turning bullish on equities and becoming less inclined to hold cash. This change in risk appetite highlights a growing confidence in asset classes like equities and bonds. The majority of managers expressed optimism towards equities, with a focus on domestic stocks and sectors like financials, industrials, banks, apparel retailers and food producers. While offshore investments are currently less favored due to perceived better opportunities in the local market, sector-specific opportunities such as in banks, retailers, and software are gaining traction among fund managers. Overall, the survey results indicate a positive outlook for the JSC All Share Index, contingent on factors like a weaker dollar, Fed cuts, and SARB rate cuts falling into place. Despite the dollar's resilience, managers remain patient and optimistic about the prospects for equities in the coming months.