SA Investment Strategy | Domestic fund managers' sector positioning in 4Q18: Where do we differ?
We expect the UW positioning in SA Mobile Telecoms to close in 2H19, as MTN reduces hard-currency debt and improves relations with government. Although domestic asset managers appear to have added to domestic stocks including SA apparel and industrials in recent quarters, we remain UW SA consumer stocks (apparel retail, industrials) given headwinds from employment growth and negative real unit labour wage increases. If we strip out the impact of government, the nominal unit labour cost increases declined from 5.4% in 2017 to 2.5% in 2018. Despite a consensus UW in Mining, we continue to prefer mining stocks with a preference for Exxaro. A dovish Fed, stable USD and easing trade tensions could be supportive for SA Miners.
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