South African stocks that do business in emerging markets, including BHP Billiton Plc (BIL) and Kumba Iron Ore Ltd. (KIO), will rise 10 percent to 15 percent annually over the next three years, Sasfin Holdings Ltd. (SFN) said.
Faster economic growth in China, Russia and India will compensate for slower expansion in developed nations, David Shapiro, the chief executive officer of Sasfin’s securities business, which oversees 45 billion rand ($6.6 billion) of assets, said in an interview.
“Emerging countries will continue to grow and they continue to demand the commodities produced by the companies,” he said. “Investors need to focus on the individual companies and see what they do on the ground.”
South Africa has underperformed emerging markets, with the FTSE/JSE Africa All Share Index (JALSH) down 3.5 percent this year compared with a 2.3 percent slide for the MSCI Emerging Markets measure. Developing economies are forecast to expand 6.3 percent this year, outpacing a 3.2 percent worldwide average, the World Bank said on June 8.
Shares including British American Tobacco Plc (BTI), Exxaro Resources Ltd. (EXX), and Cie. Financiere Richemont SA (CFR), the maker of luxury watches, will also help lead “double-digit growth” in South Africa’s stocks gauge, Shapiro said. Wealthy Chinese consumers own 4.4 luxury watches on average and Richemont’s Cartier is the most preferred jewelry brand, according to the Hurun Wealth Report.
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