This comes as economic optimism among the South African fund managers has now come off recent peaks, with expectations of a better backdrop deteriorating with geopolitical uncertainty.
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Tawanda Karombo
Sentiment is thawing among South African fund managers that the South African Reserve Bank (Sarb) will cut the repo rate at its next meeting next week as jitters over geopolitical tensions stemming from the US and Israel war on Iran entrench, with the 12 month rand forecast weakening.
A new Bank of America Securities survey shows that 75% of polled South African fund managers believe the Sarb will cut rates at its next rate decision meeting compared to 94% previously.
Uncertainty from the Israel/US war in Iran have also given rise to managers who are unsure of what to expect for the next Sarb rate decision.
“A weaker dollar and proposed 3% inflation target put on hold with rising oil prices. Elevated metal prices provide a buffer, for now,” said John Morris, South Africa strategist for Bank of America Securities.
This comes as economic optimism among the South African fund managers has now come off recent peaks, with expectations of a better backdrop deteriorating with geopolitical uncertainty.
“In addition, S. Africa needs true reform and growth, to put South African citizens first, a weaker dollar outside a global recession and lower oil prices. The 12-month rand forecast weakened to R16.02/US$ compared to R15.47/US$ previously,” noted the South Africa Fund Manager Survey for March.
Twelve surveyed fund managers, constituting 68% of those polled “expect the economy to get a little stronger” compared to 88% previously. About 38% of those surveyed expect inflation slightly higher though.
André Lourens, economist with the Minerals Council of South Africa said on Thursday that South Africa’s headline inflation gains have begun “to unwind as fuel prices reversed course in March and global oil markets reacted to the outbreak of conflict” in the Middle East.
“Brent crude has already risen by more than 40% month-on-month, the rand has weakened, which will further increase headline inflation.
South African fund managers have, meanwhile, emerged as overweight on gold, software and equities although domestics appeared to lose ground.
For March, there has been “high manager positioning relative to history in gold, software, equity and life” amid low positioning in cash telecoms, healthcare and chemicals.
There were biggest gains in gold and offshore while biggest declines were recorded in telecoms, retail and food producers as well as real estate, metals and mining. On a 12-month view, resources lost ground to industrial and financials.
Within resources, platinum and metals and mining lost ground while chemicals were less disliked.
The ongoing uncertainty saw more South African fund managers maintaining positions and the rest mainly considering adding to non-commodity rand hedges or selling equities.
About 94% of surveyed managers compared to 81% previously said they expect government reform at the same pace as weak earnings trumped all other top concern factors in March.
Over the 12 month view outlook, managers reflected an inclination towards the industrial sector, apparel retailers and software, with general industrials gaining ground. There were gains in healthcare while tobacco lost ground, with telecoms more disliked.
“Banks remain the favourite sector. The combined score of banks and apparel retailers since 2006 has fallen from a record high 45% in November 2025 to an elevated 31% this March (29% last month). A score of 31% and above only happens 11% of the time,” said the survey report.
In terms of bonds, 13% of surveyed managers said South African bonds are undervalued compared to 6% who last month said bonds were overvalued.
About 63% said bonds are currently fairly-valued while 50% of managers highlighted that SA equities are undervalued compared to 6% who view equities as overvalued.
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