Housing in Southern Africa December 2015

News

Fall of the big five C annon Asset Managers PortfolioManager, Samantha Pauwels, says that investors and analysts often put the biggest companies on a pedestal. Industry heavyweights and familiar household brands usually dominate their sectors for years. This often creates a barrier for newcomers and investors find comfort in investing in large, prominent companies as they invariably perform very well. Pauwels says, “The big five in the construction sector includes Wilson Bayly Holmes, Murray & Roberts, Basil Read, Group Five, Aveng or rather it was. Remarkably, the big five of the construction industry have fallen from their high-rise status.” She explains, since 2007 the big five have lost 79% of their value, a total loss of R60 billion in value. There are a handful of companies that have been able to increase shareholder value during this tough period. “Things have structurally changed with China shifting from an investment-driven economy to a consumption-led one. Certain industries are cyclical and there will be peaks and troughs. This we should accept. However, we need companies to be able to adapt, be flexible, innovative and entrepreneurial during these challenging times.” “While government spend is not on stadiums, it is being directed at other vital pockets such as roads, housing andwater infrastructure which are currently very buoyant. We need companies to be agile, withmanage- ment teams that are able to do business in challenging times. Whilst the big five were falling, the likes of Calgro M3 and Afrimat were rising. Noth- ing stopped the big five from adapting and navigating as times changed. However, they continue to look in the rear view mirror, missing today’s opportunities that lie straight in front of them.” ■