Sunday share tips: Homebuilders, Atlas Mara

5th Jun 2016 22:14

(ShareCast News) - Earnings at their cyclical peak for the country´s main homebuilders means investors would do best to steer clear of the sector, The Sunday Telegraph´s Questor said.Rounds of government funding and low interest rates - amongst other factors - have left the sector primed to perfection and ill-placed to face uncertainty from Brexit.The see-saw price action in the shares of even the top housebuilders as the Brexit poll results rolled in over the past few weeks is proof of the sector´s exposure to a hypothetical decision to leave the European Union, Questor said.Indeed, the most recent data available from Markit Economics and the Chartered Institute of Procurement & Supply revealed that in May residential building activity slowed to its slowest pace in three years."In chasing further gains or the dividend, income investors could be exposing themselves to a loss of capital."On balance we would rather keep our capital away from such an uncertain sector when the potential for returns has passed," the tipster concluded. Atlas Mara is unlikely to live up to the promises of former Barclays´s chief Bob Diamond, The Times´s Danny Fortson said in his Inside the City column.When Diamond listed the shell company in December 2013, it was billed as a premier pan-African bank in the making.Instead, it is now a niche player with a questionable future, according to Fortson.Should Diamond´s and co-founder Ashish Thakkar´s bid for Barclays´s African operations be successful then things would change, as they could then combine the two companies.Yet given the political turmoil in South Africa and likely opposition from the central bank to a group of investors backed by a private equity capital outfit (Carlyle) owning one of its lenders, the odds are stacked against Diamond and Thakkar.Furthermore, given prior remarks from Atlas that it was not interested in South Africa may mean that its "strategy to acquire banking assets and reach critical mass in sub-Saharan Africa is proving harder than it originally anticipated", Fortson said, citing analysts at Citi."What happens if it fails? Investors can ask at the annual meeting this week. Sell," Fortson said.