Fund managers expect higher activity on NSX

THE majority of local asset management com-panies believe trading activity on the Namibian Stock Exchange (NSX) could improve in 2023.

Last year was expected to be characterised by continued recovery from economic losses expe-rienced in 2020, and bullish sentiment favoured improved equity returns in 2022, says economic commentators Simonis Storm Securities.

“However, Russia invading Ukraine in Febru-ary 2022 and subsequent historically high infla-tion, rising interest rates, geopolitical tensions and growth concerns all led to outflows of cryp-tocurrencies and equities as investors preferred lower-risk assets,” Simonis says.

Namibia saw rising bond yields and rates/yields improving on shorter-term money market instruments.
To this end, Simonis says Namibian bonds and money-market funds (cash) were the top-performing asset classes in 2022.

“Namibians holding Kruger rand coins would also have seen their value increase last year as gold was the third-best performer,” the analysts say.

Nine out of 10 local asset management compa-nies participated in Simonis’ Fund Manager Survey 2023, and 56% of portfolio managers indicated that trading activity would be in line with 2021.
Anticipated trading in government bonds, on the other hand, is fairly mixed as an equal share of managers see bond trading in 2023 being flat, higher, or significantly higher than last year.
When asked about preferred corporate actions from NSX-listed companies with excess cash on their balance sheets, 67% of respondents prefer ‘Pay special dividend’, 22% prefer ‘Increase dividend payout ratio’, and 11% prefer ‘Look for expansion opportunities within Namibia’.

‘Announcing share buybacks’ and ‘Looking for opportunities outside Namibia’ did not receive any responses.

Compared to last year, ‘Look for expansion opportunities within Namibia’ and ‘Hold and wait’ were the second and third-most preferred corporate actions after ‘Pay special dividend’, indicating that the preference for cash has in-creased since the survey in 2022, Simonis says.

There seems to be some appetite for Namibian equities, as 56% of portfolio managers chose ‘overweight’.

South African equities are more preferred, however, since 78% of managers chose ‘over-weight’ on these.

A larger proportion of managers chose ‘over-weight offshore equities and bonds’.
Most portfolio managers are bullish on com-modities this year, and almost all are bearish on property.
Lastly, 67% of respondents are ‘underweight on cash’, with only three respondents being ‘overweight on cash’.

Simonis says if given an unlisted investment mandate, some portfolio managers would invest in the fintech and energy sectors.
“When asked if they support the Heineken acquisition of Namibia Breweries, 67% said yes,” Simonis says.

Most attractive NSX-listed stocks among portfolio managers include Namibia Breweries, Firstrand Namibia, Paratus Namibia Holdings, Standard Bank, MTC, and Letshego Namibia.
This is slightly different from last year’s survey, as Standard Bank, Letshego and MTC were not among the top picks.

Oryx Properties was the third-most attractive stock in 2022’s survey.
Simonis says increasing the local asset require-ment within Regulation 13 is a concern for some portfolio managers, while others commented on policy uncertainty that weighs on sentiment and foreign direct investment.

They say regulation on financial advisers should increase to ensure they are properly educated before dealing with clients, and regulation should allow retirees to withdraw more than one third of their pension fund as a tax-free benefit.
– email: matthew@namibian.com.na