The financial market is no stranger to uncertainty. And the latest wave of volatility brought on by the US-Iran War, although unwelcome, proves that investors can still find pockets of opportunity in the market. Joining CNBC Africa to unpack Anchor Capital’s strategy and asset allocation, for the third quarter is Peter Armitage, CEO at Anchor Capital.
Tue, 21 Jul 2026 16:21:21 GMT
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Key Points:
- Anchor Capital said strong corporate earnings, especially in the U.S., remain the dominant force shaping markets despite volatility linked to the U.S.-Iran war.
- The firm expects U.S. earnings growth of 15% a year or more over the next three years and said its 10% equity market return forecast could be conservative.
- Anchor is positive on South African equities, neutral on local listed property and underweight local cash, arguing that domestic stock valuations are more attractive after other asset classes outperformed.
- The asset manager remains constructive on offshore equities beyond AI chip stocks and sees selective value in large U.S. technology platforms that have lagged this year.
- Anchor also favors alternative assets as a portfolio stabilizer that can deliver steadier returns when listed equity markets come under pressure.
Topics
Anchor CapitalPeter ArmitageQ3 2026 strategyasset allocationSouth African equitiesoffshore equitiesAI investmentU.S.-Iran warmarket volatilityalternative assetslisted propertycash allocation
- Anchor Capital said it remains constructive on equities in the third quarter, arguing that strong earnings growth and AI-led investment are outweighing geopolitical volatility tied to the U.S.-Iran war.
- The firm expects U.S. earnings growth of 15% a year or more over the next three years and said its 10% equity market return forecast may prove conservative.
- Anchor is positive on South African equities, neutral on local listed property and underweight local cash, saying valuations in domestic stocks look more compelling after bonds and property outperformed.
- The asset manager also remains constructive on offshore equities and alternatives, while describing its broader positioning as pro-risk but measured.
Anchor Capital is keeping a pro-risk stance into the third quarter, with a preference for equities over cash and listed property, as the South African asset manager argues that resilient earnings growth and a global artificial intelligence spending boom are proving more powerful than market anxiety over the U.S.-Iran war.
Peter Armitage, chief operating officer at Anchor Capital, said in a CNBC Africa interview that the key driver behind the firm’s positioning is not the latest geopolitical headline but the trajectory of company profits, particularly in the United States.
“I think the key factor is what’s underlying in terms of equity markets is the earnings growth, and how much the value of companies are going up by,” Armitage said.
He said the U.S., which he estimated makes up roughly 65% to 75% of global equity markets depending on the measure used, continues to benefit from stronger-than-expected profit growth. A large part of that, he said, is being driven by a wave of AI-related capital expenditure that he put at around $800 billion.
Armitage likened the spending cycle to building “30 power stations all at the same time,” arguing that the scale of investment is feeding through not only to technology companies but to the broader economy. That, he said, is helping support company values even as investors contend with oil-price shocks and conflict in the Middle East.
The comments come as investors try to assess whether higher oil prices and renewed geopolitical tension will derail broader risk appetite. Armitage said markets have so far largely looked through the energy shock, betting that the pressure will not be permanent.
He said Anchor sees an unusually supportive backdrop in which both fixed income and equities offer reasonable return prospects. Higher interest rates, while a headwind for some sectors, have also improved yields on income products.
In South Africa, Armitage said rates had already risen by 0.25 percentage point and that another 0.25 percentage point increase could still come through, as inflation effects from higher oil prices feed into the economy. Even so, he said investors can still earn attractive returns in income funds while maintaining exposure to equities for stronger long-term upside.
“You’ve got quite rare circumstances where both income and equity markets look pretty reasonable,” he said.
On equities, Anchor expects U.S. earnings growth of 15% a year or more over the next three years. Armitage said the firm’s 10% return forecast for equity markets could therefore be conservative, even if conflict-related volatility weighs on sentiment in the short term.
Locally, the firm is positive on South African equities, neutral on listed property and negative on cash. Armitage said that reflects expected future returns rather than recent performance.
Listed property has outperformed local equities in recent discussions and market commentary, but Armitage said that very strength is part of the reason Anchor is less enthusiastic now. In his view, the better opportunity has shifted toward equities after a period in which domestic stocks lagged while bond and property markets performed strongly.
He said South African bonds have benefited from foreign investor inflows and from improving perceptions of the government’s economic management, including ratings upgrades. But he argued that those improvements have not yet been fully reflected in the non-commodity portion of the domestic equity market.
According to Armitage, many South African stocks still trade at a steep discount to U.S. peers. “You’re paying probably 40% of what you’re paying for similar companies in America,” he said, adding that while valuations should not necessarily reach parity, the gap now looks too wide.
He also pointed to opportunities in large index names. Naspers and Prosus remain significant components of the local market, and Armitage said Tencent, their key underlying exposure, has been performing well. He said Naspers and Prosus are trading on what he described as a forward multiple of about 11, near the cheapest level seen in roughly five years.
Within domestically exposed shares, or so-called SA Inc stocks, he said banks look particularly attractive. Armitage said investors can get dividend yields of 6% to 7% alongside earnings growth of about 10%, implying the potential for total returns of 15% or more if market ratings remain unchanged.
Anchor’s cash positioning also differs between local and offshore portfolios. Armitage said the firm is underweight cash in South Africa but neutral on offshore cash because cash is ultimately a residual allocation and should be judged against the returns available in other asset classes.
He said investors can earn more than 8% in South African core income funds, compared with around 3.75% in a U.S. money market account such as those offered by JPMorgan. Those are not poor returns relative to inflation, he said, but Anchor still sees enough upside in equities and bonds to justify moving cash into markets.
Offshore, Armitage said Anchor remains constructive on equities but is not narrowly focused on AI chip names. He said 2026 has been difficult for many active managers because a small slice of the market tied to AI hardware and semiconductors has raced ahead while much of the rest of the market lagged.
That, he said, may now be creating opportunities in less fashionable corners of the market. He pointed in particular to large U.S. technology platforms such as Microsoft, Amazon and Alphabet, saying they have not done much this year even though earnings growth remains solid.
Investors, he said, are questioning whether the heavy spending on data centers will generate an adequate return on investment. But because those companies have broadly treaded water while profits continue to expand, Armitage suggested valuations now look closer to the rest of the market than many assume.
Anchor is also positive on alternative assets, an area that remains less widely held by South African investors. Armitage said the attraction is not that alternatives will beat equities in a runaway bull market, but that they can offer a different return profile.
“If equities go minus 10%, we’re still expecting them to do 10%,” he said.
He described alternatives as a way to access assets not readily available on public equity markets, while also helping smooth portfolio returns through periods of listed-market volatility.
On inflation and monetary policy, Armitage said Anchor’s pro-risk stance is measured rather than aggressive. The firm is not advocating indiscriminate risk-taking, but it does believe investors are being compensated for moving beyond cash.
He said the main macro risk remains the possibility that oil prices stay elevated for an extended period, pushing inflation higher and causing markets to wobble. Still, he argued the world is not facing a structural oil shortage.
“There’s plenty of oil in the world. It’s a logistics issue that we’re dealing with,” Armitage said.
If tensions ease and oil prices normalize, he said, inflation could fall sharply, with oil potentially returning to $50 a barrel and even opening the door to a period of very low inflation or brief deflation in the U.S. next year.
For now, Anchor’s message to investors is that volatility alone should not be a reason to retreat. With earnings still expanding, yields elevated and valuations in several areas looking reasonable, the firm is entering the third quarter positioned for returns across equities, fixed income and alternatives, while keeping a close eye on inflation and the path of oil.
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