Africa’s biggest fund manager favours South African platinum equities over those of gold, betting against the price performance of the metals and the share performance of the companies that mine them.
The Pretoria, South Africa-based Public Investment Corp., which manages the equivalent of $150bn, is the biggest or second-largest shareholder in South Africa’s four top gold producers and two largest platinum miners, according to data compiled by Bloomberg.
It prefers platinum because of the metal’s industrial applications, while gold is primarily used in jewelry or for investment purposes, Daniel Matjila, chief investment officer, said.
The gold price advanced 7.1 percent this year compared with a 3.7 percent gain for platinum. At the same time, an index of gold stocks traded in Johannesburg surged 51 percent, heading for its first annual increase in three, while a measure of platinum shares declined 12 percent in what will be its fourth year of losses.
“Platinum is strategic in the long term,” Matjila said in an August 27 interview at Bloomberg’s offices in Johannesburg. “We like industrial metals, not those about sentiment,” he stated.
South Africa is the world’s biggest producer of platinum, accounting for about three quarters of all supply, and Africa’s largest supplier of gold.
The PIC, which manages money on behalf of the Government Employees Pension Fund, holds 11.8 percent of Impala Platinum Holdings Ltd, the second-largest producer of the metal, and 3.2 percent of Anglo American Platinum Ltd,the biggest. It also owns 7.6 percent of AngloGold Ashanti Ltd, 7.7 percent of Gold Fields Ltd, 7.5 percent of Sibanye Gold Ltd and 6.5 percent of Harmony Gold Mining Co.
Output tumbled at Anglo American Platinum, Impala and Lonmin Plc after a five-month wage strike this year, prompting them to review growth plans or put mines up for sale.
“We want to hang in there,” Matjila said. “It should bounce back at some point. We are a long-term player.
“The most important thing is to try and resolve all these problems around mining, the Marikana issue, the social issue,” Matjila, 52, said. “We need to come up with a solution, at least a long term solution.”
South Africa plans to promote manufacturing to reinvigorate sluggish economic growth, which measured an annualised 0.6 percent in the second quarter after contracting 0.6 percent in the first three months of the year. South African companies should explore more ways of using platinum in domestic manufacturing, Matjila said.
