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Cash or the bank

30 January 2004 Angelo Coppola

Cash is not as attractive today as it was last year, what with interest rates moving sideways, and the tax implications of being in cash.

"This means that equities are more attractive, especially when one considers dividend yields," says Patrick Ntshalintshali, a fund manager at OM Asset Management.

Local equity pe ratios are at a significant discounts when compared to the S&P 500. "Keep your money in South Africa. Added to which we are not particularly expensive, when compared to other emerging markets - We are not looking bad, at all."

Local equities are attractive, specifically against bonds, property and cash over 12 months.

As an example, he looked at the banking sector and sketched a scenario that justified a house view that the banking sector may be the place to be. Consider a dividend yield of 3.9%, he forecasts that the 12-month conservative forecast total return of 14.3%. "This sector is well-placed for growth."

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