Equity markets inspire confidence
Business confidence in the investment management industry rose in the second quarter despite volatile markets - buoyed solely by the recent strong run by the resources sector.
The latest Ernst & Young Investment Management index results show that investment management confidence reached 81 index points, up from 77 in the first quarter.
Chris Sickle, Investment Management director at Ernst & Young, said: "We suspect that the confidence in the sector is as a result of stronger equity markets. The JSE reached fresh all-time highs during May, despite a lot of uncertainty in the market about overall economic conditions."
He said the JSE had benefitted from strong commodity prices.
"This has led the resources sector to reach new highs during the quarter under review, with platinum and other resource companies' share prices going from strength to strength," he said.
Makwe Masilela, investment analyst at Nehawu Securities, said the confidence was misplaced as the conditions that sent markets tumbling had not changed. "If the stronger confidence in the sector is a result of stronger equity markets because the JSE reached new highs during May, then one has to think again. Markets were driven only by commodities, and those new highs didn't even hold for long," he said.