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‘Domestic demand will drive South African growth’

South Africa is entering a sustainable low-interest and low-volatility environment, making it ripe for investment, says Old Mutual South Africa trust manager Richard Hasson.

He has increased the exposure of the fund to stocks capitalising on growing dom- estic demand, such as retailers, with a 12 per cent weighting in the sector.

He has given a positive tilt to Nasionale Pers, a domestic pay-TV firm with a growing and loyal customer base. He also says car sales are returning to long-term trends after suffering what he describes as “two lost decades” in the last years of apartheid.

The fund is underweight in SAB Miller, one of South Africa’s bigger and better-known stocks, making up 5.9 per cent of the South African JSE index.

The brewing company has got an aggressive internat- ional expansion strategy, having bought Italian beer firm Peroni, but its positioning does not suit Hasson’s bullishness on the domestic market.

The fund is up by 163.3 per cent over three years but Hasson says global emerging markets fund managers remain underweight in South Africa relative to their positions in China and Latin America.

He confidently expects the domestic market to grow by 20 per cent in the next 12 months.

Hasson says: “At the end of the 1990s, post-apartheid, increased competition kept growth low and there were concerns that the economy might collapse. But we now believe that South Africa is globally competitive and foreign investment has been pouring in.”

Bestinvest business development manager Justin Modray says: “There are some good investment stories to talk about in South Africa and we are likely to see global emerging markets managers upping their exposure but I think that negative perception of the country’s political situation continues to cloud UK investors’ judgement.”

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