Goldman downgrades South African equities, bullish on emerging Europe
March 20 (Reuters) - Goldman Sachs downgraded its recommendation on South African equities to "marketweight" from "overweight" on Thursday, saying the European Union's growth prospects presented better opportunities to invest in the region's emerging markets.
Consequently, the Wall Street brokerage bumped up its rating on the Czech Republic to "neutral" from "underweight" and kept its "marketweight" rating on Turkey and Poland.
The remarkable shift in Europe's fiscal policy and optimism around a potential Ukraine peace deal have fuelled a rally in EU-exposed equities such as Poland, Greece and the Czech Republic, analysts led by Sunil Koul, Goldman's global emerging market equity strategist, said in a note.
Earlier this week, Germany's parliament approved plans for a massive spending surge, while the U.S. and Ukrainian presidents have agreed to work together to end Russia's war with Ukraine.
Polish (.WIG20), opens new tab, Greek (.ATG), opens new tab and Czech (.PX), opens new tab stocks have advanced between 16% and 25% year-to-date. In comparison, South African stocks (.JTOPI), opens new tab have risen 10% so far in 2025, while the broader EM index (.MSCIEF), opens new tab has gained about 6%.
"Notwithstanding near-term risks from higher tariffs, EM Europe is still the most inexpensive pocket within EM, and is trading at a 35% discount to MSCI EM," Koul said.
While South African equities offer mid-teen EPS growth at reasonable valuations, there are limited catalysts in the near term, the brokerage said.
It said China-sensitive stocks, like miners, have already rallied sharply and domestic cyclicals could continue to lag amid the uncertainty over its budget, which was recently rejected by most big parliamentary parties.
Goldman said that just last week it closed its trade banking of South African equities' outperformance against EM-excluding China, which was initiated last May, at a potential gain of 21%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mirror
35 minutes ago
- Daily Mirror
Elon Musk drops 'really big bomb' with huge claim about Donald Trump
Donald Trump and Elon Musk's bromance has come to a spectacular and petty end as the Tesla boss dropped what he has called a huge "bomb" about the President. Taking to his X (Twitter) account, the richest man in the world said it was "Time to drop the really big bomb" before claiming that Donald Trump "is in the Epstein files". Trump's name was released as previously sealed court documents were made public last year, in which he was named as an associate of the disgraced financier Jeffrey Epstein. There is no suggestion he knew of any crimes or participated in any criminal behaviour. The South African billionaire, who bought his way into Washington by pumping millions into Trump's campaign, has taken to X to add more fuel to the pair raging between the former pals. Once Trump's right hand man, Musk left his special government position as the Department of Government Efficiency - specially set up by the President for the Tesla CEO who seemed to be longing for a top job in Washington - a week ago. The fall out between Musk and Trump has gotten out of control in just a few days, spiralling into a series of petty online fights. The Tesla boss, on X, wrote: "Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate."
Reuters
an hour ago
- Reuters
Israeli military says it will strike Beirut's southern suburbs
CAIRO, June 5 (Reuters) - The Israeli military on Thursday told residents of four neighborhoods in Beirut's southern suburbs to evacuate ahead of strikes on what it said were underground Hezbollah drone-manufacturing sites, and thousands fled. The evacuation warning, published on X, was the first such warning in over a month for the suburbs, which were hit hard in the year-long war that ended in a ceasefire in November. Residents rushed to leave the area, causing traffic gridlock. "Despite the understandings between Israel and Lebanon, the IDF has identified that the Hezbollah aerial unit is operating to produce thousands of UAVs, with the direction and funding of Iranian terrorists," the army added in a statement, using acronyms for the Israel Defense Forces and drones. There was no immediate comment from Hezbollah. A U.S.-brokered truce in November halted the fighting between the Iran-backed Hezbollah and Israel. Each side accuses the other of not entirely living up to its terms, and the ceasefire has looked shaky in recent months.
Reuters
an hour ago
- Reuters
Drillers, unions urge US senators to preserve hydrogen credit
WASHINGTON, June 5 (Reuters) - A coalition of nearly 250 companies and business and labor groups on Thursday urged top U.S. Republican senators to preserve a credit for the emerging hydrogen fuel industry as they hash out President Donald Trump's tax and spending bill. Oil and gas lobbying group the American Petroleum Institute, a local unit of the International Brotherhood of Electrical Workers, and DuPont (DD.N), opens new tab urged Senate Majority Leader John Thune and Senator Mike Crapo to extend the construction deadline to December 31, 2029 for hydrogen projects to receive a tax break. The Senate is debating its version of the bill after the House of Representatives terminated the so-called 45V credit for any project which begins construction after the last day of 2025. "If this course of action is adopted by the Senate, it will drive tens of billions of dollars in planned private sector investments out of the United States and into other countries," the groups said in a letter to the senators, dated June 5. "Failing to act now by preserving 45V means ceding the future of hydrogen to China." The Business Council for Sustainable Energy and the Nuclear Hydrogen Initiative also signed the letter. House Republicans slashed the credits which had been included the Inflation Reduction Act, the landmark climate legislation signed by former President Joe Biden, a Democrat. Under the IRA, hydrogen producers got tax credits for projects that began construction before 2033. Industry analysts say clean hydrogen, opens new tab, or hydrogen produced from non-fossil energy sources, or natural gas paired with technology to capture carbon emissions and store them underground, is needed to decarbonize heavy industry and some vehicles. The letter said clarity from lawmakers would spur tens of billions of dollars in private capital, boost domestic manufacturing, and create long-term employment in construction, operations, and technology.
