Global markets are in turmoil following rising inflation, interest rate increases, the war in Ukraine, and a looming recession.
The S&P 500 declined by over 20% this year, and the tech-heavy Nasdaq Composite index plummeted by 34%.
There is hope that the market may be close to the bottom, but the Federal Reserve’s aggressive campaign to curb inflation gave the market another blow this week.
On Wednesday, the Fed announced the fourth straight 75 basis-point interest-rate increase, which caused US markets to decline.
Federal Reserve chair Jerome Powell indicated that they might start to slow the pace of tightening as early as the next meeting.
However, he warned that rates would likely have to go higher than initially expected and that they will likely need to stay high for longer.
Powell said the Fed would be biased towards overtightening to ensure inflation does not become entrenched.
The markets did not like what they heard – the S&P 500 closed 2.5% lower, and the Nasdaq fell by 3.4%.
South Africa is not immune to global economic forces and is also experiencing rising inflation and interest rate hikes.
Reserve Bank governor Lesetja Kganyago said they would continue using interest rates to curb inflation.
At 6.25%, the Reserve Bank’s repurchase rate is still below long-term levels and in expansionary territory.
The consequences of the central bank loosening its grip on inflation and falling behind global peers as rates are being normalised would be “too costly,” he said.
Stock picks from top analysts and fund managers
Although the market is volatile with big downside risks, many analysts highlighted that it offers a great opportunity to pick up stocks at reduced prices.
Although the market can fall in the short term, it will rise again and reward investors who bought quality companies during this downturn.
Billionaire investor Bill Ackman said the current market offers a good entry point, similar to early 2020.
“This is another good moment. I don’t know how well you are going to do over the next six or twelve months, but over the next few years, it is a good place to be an investor,” he said.
However, it came with a caveat. “You want super high-quality, well-capitalised, dominant businesses that you know will be here 30 years from now.”
It raises the question of which companies South Africa’s top analysts and fund managers see as the best picks.
To answer this question, Daily Investor summarised the stock picks from these investors over the last month.
It revealed a strong bias towards local stocks – 70% of October’s share picks are companies listed on the Johannesburg Stock Exchange (JSE).
MTN was a firm favourite, with Annatjie Van Rooyen, Carmen Mpelwane, Jonathan Fisher, Martin Smith, and Rob Towell saying it offers good value.
Other popular South African stocks include TFG, Sappi, Reinet, Naspers, City Lodge, and AVI.
The table below shows the stock picks over the last month.
|David Shapiro||Sasfin Securities||ASML||NASDAQ|
|David Shapiro||Sasfin Securities||Hermes||EPA|
|David Shapiro||Sasfin Securities||LVMH||EPA|
|David Shapiro||Sasfin Securities||Moncler||BIT|
|David Shapiro||Sasfin Securities||Visa||NYSE|
|Wayne McCurrie||FNB Wealth & Investments||Alphabet||NASDAQ|
|Wayne McCurrie||FNB Wealth & Investments||CMH||JSE|
|Wayne McCurrie||FNB Wealth & Investments||JSE All Share Index||JSE|
|Wayne McCurrie||FNB Wealth & Investments||TFG||JSE|
|Ricus Reeders||PSG Wealth Ruimsig||AdvTech||JSE|
|Ricus Reeders||PSG Wealth Ruimsig||Altron||JSE|
|Ricus Reeders||PSG Wealth Ruimsig||AVI||JSE|
|Jean Pierre Verster||Protea Capital Management||Builders FirstSource||NYSE|
|Jean Pierre Verster||Protea Capital Management||Copart||NASDAQ|
|Jean Pierre Verster||Protea Capital Management||Ferguson||NYSE|
|Dale Hutcheson||Absa Asset Management||Mr Price Group||JSE|
|Dale Hutcheson||Absa Asset Management||Murray & Roberts||JSE|
|Dale Hutcheson||Absa Asset Management||Reinet||JSE|
|Nick Kunze||Sanlam Private Wealth||Sibanye Stillwater||JSE|
|Nick Kunze||Sanlam Private Wealth||Standard Bank||JSE|
|Graeme Körner||Körner Perspective||Brookfield Renewable Corp||NYSE|
|Graeme Körner||Körner Perspective||TFG||JSE|
|Chris Gilmour||Independent||City Lodge||JSE|
|Chris Gilmour||Independent||City Lodge||JSE|
|Deryck Janse van Rensburg||Anchor||Amazon||NASDAQ|
|Deryck Janse van Rensburg||Anchor||Sasol||JSE|
|Graeme Franck||PSG Wealth Sandton Grayston||Anglo American PLC||JSE|
|Graeme Franck||PSG Wealth Sandton Grayston||Naspers||JSE|
|Imtiaz Suliman||Sentio Capital||AVI||JSE|
|Imtiaz Suliman||Sentio Capital||Sappi||JSE|
|Jimmy Moyaha||Independent||Capital Appreciation||JSE|
|Mark du Toit||Oyster Catcher Investments||Investec||JSE|
|Mark du Toit||Oyster Catcher Investments||TFG||JSE|
|Roy Mutooni||Absa Asset Management||Bidvest||JSE|
|Roy Mutooni||Absa Asset Management||Thungela||JSE|