Share to watch: Keep your eyes on Nedbank for a big bounce-back

JOHANNESBURG – Buying shares at unprecedented value – compared to the past – is not an opportunity often presented in the markets.

This might be the case with the South African financial shares. They are quality stocks, but the financial markets are incredibly negative, not only are the potential effects of the coronavirus at the top of our minds, but the weak South African economic conditions are the biggest concern.

Nedbank is now trading at 0.9times its price to book value; this is more than 20percent below its five-year average and 35percent below its South African peers.

Some of the reasons might be concerns regarding its exposure to state-owned enterprises, as well as the beleaguered property sector.

It is all about the quality of its assets and their coverage levels when compared to the other banks. What one should not forget is that Nedbank has in the past always shown credit losses in line with the sector average; therefore, we can assume they will be able to maintain the same.