Alexforbes H1 market preview and H2 outlook

The second half of the year has kicked off with a mix of volatility and strength in the markets, with the JSE showing a gain of over 2% since the beginning of the month, reaching a record close of 81,155 last Thursday. The rand has also shown firmness. To gain more perspective on the outlook for the remainder of the year, CNBC Africa interviewed Mandisa Zavala, the Head of Asset Allocation at Alexforbes. Zavala shared her insights on the recent market performance, where the value lies, and the potential paths for the future. Reflecting on the rapid performance uptick in the second half, Zavala pointed out both surprises and expected outcomes in the market's behavior. She highlighted the positive turn of events for South Africa, which has seen increased investor confidence following the resolution of uncertainties post-elections. This newfound assurance has translated into notable inflows into South African bonds and equities, welcoming not only local but also offshore investors to the market. Analyzing the performance of equities, Zavala emphasized the resilience of smaller players who weathered the storms faced by the South African economy. Despite challenges like load shedding, these smaller companies presented value opportunities due to their undervaluation. As a long-term investor, recognizing and capitalizing on such mispricing moments could yield significant benefits over time. Zavala also shed light on the strength of resource stocks, catalyzed by the global uptick in commodity prices, showcasing a positive trend in the sector. Zavala delved into the currency dynamics and bond market activities, noting that the robust yields offered in the bond market are currently well-compensated for the associated risks. Regarding the RAND, Zavala explained the delicate balance between local fundamentals and global influences, particularly in relation to US interest rates. She expressed caution regarding a strong rally in the RAND, considering the upcoming US election period and its potential impact on the dollar's strength. In conclusion, Zavala's insights painted a picture of cautious optimism for the market's future trajectory. While the recent performance has been promising, uncertainties loom on the horizon, requiring a balanced approach to navigate the evolving market landscape. With a keen eye on value opportunities and a strategic assessment of currency and bond market developments, investors can position themselves to capitalize on potential growth while mitigating risks.