Market Commentaries

Global Market

World markets ticked up again in August whilst volatility remained at all-time lows. This, despite Trump firing a few more recent hires, abandoning his business think tanks (or did they abandon him?) and using twitter to threaten Kim Jong-Un of North Korea. It is no wonder the mighty US Dollar is experiencing a bit of weakness of late. The MSCI World Index was down -0.1% in August, with the MSCI Emerging Markets Index up 2%. Emerging markets are now up 25% over the last year and developed markets are up 11%.

South African Market

Seemingly out of the blue, the JSE ended the month at a record high on the last day of July. This is the first time since 4 April 2015, that the JSE has been above 55,000 points, bringing the return for the year to date up to a respectable 9%. The JSE finally moved out of its two-year sideways movement with a 7% rally in July. This rally was led by resource shares, which were up 13.3%.

South African Market

News flow in June tested the resolve of even the most hardened South African optimists. Not only did we face the horrendous social impact of the Cape storms and fires, but the nation’s political story line continued to amaze. In sympathy, the All Share Index lost 3.5% for the month bringing the return for the first six months of 2017 to a sedentary 1.9%. In last month’s update, we wrote about the increasingly tight personal financial situation South African’s are finding themselves in, as well as the reluctance of business to commit long-term capital in such an uncertain environment.

South African Market:

The All Share Index ended the month down by -0.4% in May taking the return for the year to date to a satisfactory 7.1%; although the local market has still not breached the previous high that it set on 24^th April 2015. The strength of the Rand continued to be the dominant theme last month, reaching a high of R12.88 to the US Dollar on rumours that the ANC’s national executive committee may remove Zuma. This current strength, despite the recent ratings downgrades, is almost certainly attributable to the net buying by foreign investors of R23.2 billion of South African bonds during April and May.

South African Market:

N THE AFTERMATH OF LAST MONTH’S EVENTS BOTH THE RAND AND THE STOCK MARKET HAVE HELD UP REMARKABLY WELL. THE RAND ENDED THE MONTH AT R 13.37 AGAINST THE US DOLLAR, AND THE JSE ALL SHARE INDEX WAS UP 3.6% FOR THE MONTH. Notwithstanding this positive performance, over the long term the downgrade is negative for the economy, our companies and our people. In discussions with clients, the question uppermost on people’s minds is why the Rand remains so strong? One view, is that the downgrade has been priced into our currency for some time, and so no adjustment has happened now that the actual event has taken place. However the performance of the Rand is also impacted by global money flows, so there are always other factors at play too.

South African Market:

Zuma’s brazen cabinet reshuffle has tipped the scale from the political tension we south africans are accustomed to living with, into fear. The immediate fallout was yesterday’s announcement that s&p have downgraded our foreign debt to junk status. We have entered a period of heightened political and economic uncertainty. So much opinion has been published in the last few days about the cabinet reshuffle that adding our two cents to the mix would be trite. Suffice to say that we share the concerns about the appointment of Zuma’s acolytes to facilitate the deals that will enrich him and his patronage network.

South African Market:

Now that’s entertainment! February started with the annual SONA bun fight and ended with …cringe!… the Oscars debacle. You would be forgiven for thinking both were theatre productions fresh from the fringe of an avant-garde arts festival. Sadly, they were not. Meanwhile, the Rand continues its winning streak, and we dedicate a large part of this month’s update to our beloved currency. For years WellsFaber have been strong advocates of diversification through offshore exposure. However, when the Rand goes through a period of strength, the performance of offshore portfolios in Rand terms looks relatively bleak. A case in point is the past year’s performance of the MSCI World Index which returned 18.8% in USD, a great return by any standard. However, as a result of the Rand’s strength, in Rand terms the MSCI World Index delivered a less impressive 2%.

South African Market:

We wish you and your families all the best for 2017 and hope that this finds you determinedly sticking to those New Year’s resolutions.  As we accelerate into the second month of 2017, we really are beginning to wonder what is “fake news” and what is not!? The following, we can assure you, is indeed, real! The primary themes that determined the fate of investment performance in Rand terms last year were (i) the rebound in resource shares (ii) the strength of the Rand (iii) the rally in bonds post Nenegate (iv) the rally in emerging markets, and (v) the strong performance of “value” as an investment style. A number of fund managers that did underperform relative to the market in 2016 were those with a high offshore exposure and/or no exposure to resource shares and/or a low bond exposure.  Those that strongly outperformed were managers with a “value” investment philosophy such as RECM, PSG and Aylett & Company, which typically included exposure to resource companies and/or cyclical companies. Having been through a few tough years in terms of performance, “value” is an investment style that is once again outperforming.

Global Markets:

If you are reading this, then you have endured Black Friday, the worst month of Springbok rugby ever, two of the dreaded downgrade announcements (with one still to come), and the end to a deplorable US election. To quote Warren Buffet, “Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”

Global Markets:

The MSCI World Index (Developed Markets) was down 2% this month whilst Emerging Markets were flat. The major contribution to the negative return of developed markets was the US S&P Index which lost 1.8% in the month. October is infamous for bringing market corrections, so on this occasion this may not be a bad result! By the time our next market update is written the appalling contest for the next US president will be over. Last week FBI Director James Coney announced that the FBI had reopened its investigation into Clinton’s use of an unauthorized e-mail server.