Anchor Capital sees growing optimism in local assets

Anchor Capital, a financial firm managing over R95 billion in assets, believes that there is cause for growing optimism in the local asset market despite recent volatility clouding the investment landscape. In a recent interview with CNBC Africa, Nolan Wapena, the Co-Chief Investment Officer at Anchor Capital, highlighted the reasons behind the firm's positive outlook. Wapena compared the current market situation to driving a car, where the past year has been challenging, but the future is starting to look more promising. He emphasized that financial assets are attractively priced due to the significant market downturns, with some assets being up to 50% cheaper. Wapena pointed out that as economies and markets move in cycles, there is a reasonable prospect of markets turning within the next 12 months. He cautioned against waiting too long to invest, as missing out on the potential upturn could result in significant losses. Anchor Capital is particularly optimistic about domestic assets, highlighting opportunities in stocks like ABSA and MTN, as well as domestic bonds with high yields. The firm sees value in banking and property stocks, as well as the local fixed income market. Wapena noted that despite global assets also being attractively priced, the crisis pricing and potential for recovery in South African assets make them more appealing in the near future. He highlighted the mispricing of assets, stating that comfortable positive returns may indicate overpricing, while discomfort could signal undervaluation. Anchor Capital projects double-digit returns for domestic equities and bonds in the next 12 months, with global assets expected to deliver slightly lower returns. When asked about the timing of market shifts, Wapena cautioned against trying to time the markets, emphasizing Anchor Capital's long-term view. The firm anticipates the Fed to slow down its hiking cycle around Q1 2023, which could lead to a different market sentiment by the end of next year. Wapena advised investors to position themselves for potential market shifts well in advance. In conclusion, Wapena encouraged investors to focus on the growing optimism in the market and to look ahead rather than dwelling on past challenges. He underscored the importance of being proactive in investments to capitalize on the improving market conditions.