Buy Long-Term S.Africa Bonds as Economy Wilts, Futuregrowth Says
- Rand undervalued while economy impeded, Old Mutual Unit Says
- Comfortable with `very gradual tightening' by central bank
This article is for subscribers only.
South African long-bond yields offer better value than cash and medium-dated bonds in an economy battered by a drop in commodity prices and a weak currency, according to Futuregrowth Asset Management Pty Ltd., a unit of Old Mutual Plc.
“This is even more so now that the South African Reserve Bank has tightened monetary policy by 1 percent since January, 2014, especially considering the weak state of the economy and more muted inflation backdrop,” Wikus Furstenberg, portfolio manager and head of the interest-rate team at Cape Town-based Futuregrowth, said in a note to investors on Wednesday.