The Bank of America ranks the local equity market as the most attractive in the Eastern Europe, Middle East, and Africa region.
Bank of America again ranked the South African equity market as the most attractive in the Eastern Europe, Middle East, and Africa (EEMEA) region, with 12 local stocks also dominating its top 20 shares.
The investment bank screened markets on indicators including profit growth, price-to-earnings ratios (an indicator of how expensive shares are), current share valuations compared to historic levels, dividends, as well as how over- or underweight emerging market funds are in its equities.
In a report released this week, South Africa was named the most attractive EEMEA equity market, with a score of 83 – far ahead of its closest competitors, Hungary (66) and Turkey (57), and widening its previous lead.
Top-down ranking of EEMEA markets (100 = best, 0 = worst)
BofA Global Research estimates
EMEA markets: Top-down ranking
DataStream, FactSet, Bloomberg, EPFR, BofA Global Research
Bank of America’s EEMEA equity strategists noted:
South Africa’s number‑one position is underpinned by strengthening dividend profiles, supportive valuations relative to history, and a growing concentration of high‑quality materials and financial stocks, even as global investors navigate heightened geopolitical uncertainty. The findings come at a time when emerging‑market flows are becoming more selective, making South Africa’s continued leadership particularly noteworthy in a volatile global environment.
After a record-long winning streak of 12 straight positive months, the US-Israel war on Iran put an abrupt end to the South African stock market’s rally.
Fuelled by mining shares, the local market gained more than 40% over the past year – but since the start of the war at the end of February, the JSE has seen a massive outflow of foreign investments.
This was in part due to risk-averse investors fleeing to safer investments, but also a reflection of SA’s dependence on fuel imports and the impact skyrocketing prices will have on inflation and economic growth.
The Bank of America report shows that emerging market funds sold a net $121 million in SA equities in the first three weeks of March. By comparison, funds invested $286 million in Israel, which launched military attacks on Iran, and $43 million in Saudi Arabia during the same period.
Still, when Bank of America screened EEMA equities on criteria such as valuations, profit growth, price-to-earnings ratios, and dividend yields, 12 of the top 20 most attractive shares were listed on the JSE.
The list includes Northam, Sibanye, Ninety One, Momentum, Investec, AngloGold Ashanti, Harmony, Sasol, Gold Fields, Telkom, Santam and Implats.
For detailed fund information – including unit trust comparison tools, investment calculators and investment industry research – go to FundHub.co.za.