South African equities are facing significant challenges, but they are severely undervalued relative to their growth potential.
“The equity market is being priced at historically low valuation multiples, and in some cases, companies are acutely undervalued relative to their prospects for growth and shareholder return,” the experts said. “In the past, emerging market and South African equities have not fared well during strong US dollar periods.”
“This would result in a substantial decrease in the base cost of capital in the economy, potentially benefiting consumers’ disposable income and reducing company interest rate expenses.”In addition, load shedding is likely to be less intense in the next few years following energy reforms, while there is also considerable new generation capacity in the pipeline from the private sector.