S.African Company Profits Up This Year, Says Asset Manager

Old Mutual Investment Group thinks that South African banks, insurance firms, and worldwide diversified groups will help reduce the negative effects of the recession.

South Africa's equity market depends on global economies. The main ones are China, Europe and the U.S. A recession in these countries could hurt South African equities.

Asset managers in Old Mutual Investment Group stated that South African companies' profits will be affected but not decline since some sectors possess defensive qualities.

At a conference by Old Mutual, Jason Swartz, a portfolio manager, stated that there could be a rise of 3% in corporate earnings in South Africa by March 2024.

Swartz mentioned a noticeable difference between a projected 20% reduction in earnings in the United States for 2024 and a 15% growth in profits reported by South African companies one year ago.

Swartz said that there are defensive parts in SA earnings. However, we should not expect to get 10-15% in the next 12 months.

The Chief Investment Officer of Old Mutual Investment Group, Siboniso Nxumalo, talked about the "defensive components." He said he had a positive outlook on South African banks and insurance firms.

Banks in South Africa, like FirstRand and Standard Bank, are cautious in giving loans. This helps them avoid giving loans to people who might not repay them. This is good for banks as they can manage their bad loans better.

Nxumalo thinks some companies are recession-proof. Examples are British American Tobacco, Anheuser-Busch Inbev, and Richemont. They make most of their money outside the country.

The company managing assets has left South African companies. These businesses are predicted to be affected by a recession in the United States. The companies include miners, small-cap businesses, and retailers. Nxumalo shared this information.

Promit Mukherjee and Rachel Savage reported the news. Jane Merriman edited it.