Surprise banking strength wrongfoots cautious South African money managers
Overly defensive South African money managers would have performed better had they spotted signs of banking stocks proving to be more resilient than expected, says Citigroup strategist Richard Schellbach. This time last year, the outlook for SA was starkly different, with the threat of economic recession looming, Schellbach said in an interview in Johannesburg. "But at the end of the first quarter, commodity prices were rallying, the currency was strengthening and inflation had come down. People started realising that there wasn’t going to be a rate-hiking cycle: we’re going to avoid a recession." "This was not the point in the cycle to be short banks," he said. "The average equity manager has struggled with performance this year. They’ve underperformed their benchmark, and that’s likely because they’ve been positioned too defensively." Johannesburg’s banking index rallied 23% in the year to date in contrast with a 16% slump in the benchmark retailers gauge. South African lenders re...
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