Kagiso asset management has recently published an article, Navigating stormy waters, which discusses recent trends and their outlook for the year ahead.
For 2011, despite volatility overseas, the domestic equity market ended the year close to its all time high. It is useful to look at the trends in the industrial, financial and resources sector over the past 3 years:
- The industrial sector has been the star performer – due to declining interest rates and declining inflation (however, these drivers are not sustainable).
- The banking sector growth has lagged both industrials and resources – recovery has been delayed by weak housing market.
- Resources: 2008 saw the end of the commodities bubble, this sector has shown the most volatility.
- Investors are looking to physical commodities as an asset class, following the unprecedented monetary & fiscal stimulus.
- We believe the events of 2011 will continue to reverberate in 2012.
- However, the ensuing impact on the equity markets is difficult to predict.
In another article by Kagiso, Gavin Woods discusses China’s internet opportunity (click here) to view the full article, China’s internet opportunity.
“In the midst of China’s furiously fast economic growth and development over the last decade, its internet sector has developed particularly rapidly. This growth has presented large returns to date for investors with foresight. Chinese internet businesses have a number of unique advantages over their western peers, which, when coupled with China’s expected material growth in household incomes and continued rapid urbanisation, present a potentially lucrative investment opportunity for the future.”
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