South African investors expect better returns – despite economic shock

Despite a historic decline in gross domestic product (GDP) for the second quarter of 2020, economists at the Bureau for Economic Research (BER) have noted a spike in the local equities market – a sign that perhaps investors believe South Africa’s economic environment can only improve.

“Despite the horrible, albeit largely as expected, SA GDP print for 2020Q2, the local equity market shot to life last week,” the group said. “Although it is always hard to correlate large market moves to any specific event, it may be that investors saw the Q2 GDP figure and thought that the environment can only get better from here.”

According to the latest Schroders Global Investor Study 2020, local investors expect to make an average annual total return of 12.67% – almost 2 percentage points higher than the global average predicted returns of 10.9%.

Between mid-February and mid-March, global stock markets fell by over 30%. During those weeks Germany, France, the UK and the majority of US states shut down to limit the coronavirus’s spread.

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