Is right now actually a great time to buy shares on the JSE?

Since 18 February this year, the FTSE JSE All Share Index has declined by 35%.

In comparison, the 2008 crash saw a 41% drop over nine months of extended hell.

Is it time to buy the crash?

For investors who can stomach further volatility, some once-in-a-lifetime buying opportunities are surfacing.

Of course, it can get worse before it gets better, but unfortunately nobody is clever enough to time the exact bottom.

We have separated the opportunities into two categories.

Lower risk, with balance sheets able to survive a period of low demand

These shares have typically not fallen as much, but many of them will offer substantial returns when the world starts to return to normal.

• Naspers: Currently, Naspers is at the greatest discount it has ever traded at (50%) and Tencent experienced a strong growth spurt prior to Covid-19. Now Covid-19 is helping the company as its huge gaming segment benefits from people staying at home.
• Transaction Capital: It is currently trading at an 11x historic private equity. The SA taxi industry has had little impact from the virus as people still need to travel.
• MTN: Absurdly cheap and this company has strong, effective annuity, earnings. We value SA alone at around R60/share.
• Discovery: Its prospects still look promising in an ever-changing environment.
• Bidcorp: This could face a tough next six months but it has a fair component of non-discretionary activity. Delivery companies also source food from Bidcorp.
• FirstRand: Its share price has dropped from over R60 to R36 this year. It now trades at a dividend yield of over 8%.

Shares of companies with higher levels of operational or balance sheet risk, but able to handle a reasonable period of disruption

These shares have more upside than the first category but need to be carefully monitored and include Investec, Sibanye/ Impala, property shares.

There are currently attractive entry points into quality businesses, which could very well get cheaper still.

Armitage is chief executive and co-chief information officer at Anchor Capital

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