JOHANNESBURG, May 31 (Reuters) – South African company profits this year will not turn negative even if the economies of the country’s biggest trading partners come under pressure, a top local asset manager said on Wednesday.
Old Mutual Investment Group, the asset management arm of insurer Old Mutual (OMUJ.J), believes South Africa’s banks, insurance companies and globally diversified groups will cushion the recessionary pressures.
More than half of South Africa’s equity market is reliant on global economies, primarily China, Europe and the U.S. and hence a potential recession in these countries could hit South African equities.
But Old Mutual Investment Group asset managers said that while companies’ profits in South Africa will be impacted, they will not turn negative as some sectors have strong defensive qualities.
Corporate earnings in South Africa could increase by up to 3% for the year ending March…