There exists a theory that investing in defensive stocks is a safe bet as companies operating in these sectors should provide stable earnings and returns, even during a downturn. Typical defensive sectors include tobacco, alcohol, healthcare and food manufacturers – the theory is that demand for these is not cyclical. People smoke, drink, need food and medical care in good times and bad.
Ascendis will spend R290m – more than its market cap – on recapitalisation Tobacco and alcohol, so-called ‘sin stock sectors’, have fared about as poorly. Shares of brewing giant AB InBev are down 26% over five years. In US dollar terms, shares are down 44% over five years. AB InBev shares on the JSE have nearly halved since the peak achieved post its listing on the bourse in January 2016, following the takeover of SABMiller.