Resource shares doing well

Isaac Moledi

Isaac Moledi

The first six months of this year show that had you invested in Resource shares, you would have smiled all the way to the bank.

Though the sector lost a massive 19,12 percent in July, year-to-date performance is still a positive 7,8percent, a good performance - especially when seen in the context of the All Share's -2,9 percent, the Financial Index's (Findi) -11,3 percent and Listed Property's -15,4 percent.

After Resource's phenomenal run the pendulum might finally have swung in favour of Industrials and Financials in July, say the experts.

An Alphen asset management team says after taking a beating in the first week of July, banks and general retailers became star performers, both ending the month about 21 percent in the black.

The Pharmaceutical sector's 29 percent monthly return should be seen against the backdrop of Aspen's 32percent rise over the month following a large ARV contract and news of clinching a deal with GlaxoSmithKline.

The worst performing sector in July was platinum and other precious metals, down 23 percent, after the metal's rand price retreated 20,5 percent.

According to the management company, Resource shares seem to be the last casualty of the four-year global bull market in equities that ended in 2007.

Whether their day is finally over or July was just a blip in their out performance remains to be seen.

Though investing in equities has its risks over the shorter-term, the Alphen team is of the opinion that they remain the best performing asset class over time and, given that companies are likely to grow their earnings, are also likely to be the best performers in the years to come.

"Our job is to find those that will, and to avoid those that will not," the team says.