Posts by pfl

Market Update October 2017

Despite negative news flow, October proved to be a fruitful month for the local equity market. The same could not be said for the local fixed income market, as sharply rising bond yields led to negative returns from the asset class for the month. Bond yields came under pressure towards the end of October, as Finance Minister Gigaba’s Medium Term Budget Policy Statement (MTBPS) laid bare South Africa’s worsening fiscal position with no plausible plan to reign in escalating government debt. This put South Africa’s sovereign credit rating in the spotlight, with downgrades from S&P and Moody’s expected imminently, meaning
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Market Update September 2017

September proved to be a difficult one for local markets as local equities failed to build on healthy gains earlier in the third quarter. Overall there was retracting investor positivity towards the local outlook as politics, economic events and declining commodity prices took their toll. Political uncertainty has in no doubt kept investors at arm’s length from South Africa, as we steam ahead towards the all-important ANC National Conference in December and the economy continues to stutter along. The World Bank slashed its South African growth forecast for 2017 in half highlighting the need for productivity improvements. Naturally this was
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Market Update August 2017

August was another good month for local markets, as the FTSE/JSE All Share Index reached a new 3-year high, fresh from achieving the same milestone during the previous month. Apart from the president surviving an eighth vote of no confidence, August was a relatively quiet month in terms of political and economic events. South Africa’s reported annualised headline inflation fell to 4.6% (July) from 5.1% (June) and continues to be supportive of further interest rate cuts, especially given the low projections for economic growth and a firmer rand. Any interest rate cuts would be a positive for local equities, listed
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Market Update July 2017

What a difference a month can make! After a torrid month of June, local markets bounced back markedly in July. Notable on the South African economic front was the decision by the South African Reserve Bank to reduce interest rates by 25 basis points in a meagre attempt to prop up shrinking local economic activity. However, the main drivers of strong returns in the equity market were resources as commodities rallied and the proposed mining charter was shelved (for now). We must also mention the contribution of Naspers (up 14% in July) which continues to gain momentum. In fact, only
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Market Update June 2017

Global markets delivered muted, yet positive returns for the month of June. Emerging market equities were again at the top of the performance pile on aggregate, outperforming their developed peers for the month. Positive sentiment fuelled by healthy levels of global risk appetite continues to underpin investor confidence in emerging markets. In the developed world, the main event was again, you guessed it, an election! This time in the UK where a surprise result, which saw the Conservatives lose their majority in parliament, led to the underperformance of UK assets. June also saw an anticipated US interest rate hike which
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Market Update May 2017

Global markets continued along their positive trend in May, despite continued political noise, slowing economic data and cooling commodity prices. Emerging market equities were again at the top of the performance pile, as asset flows into these markets reached their highest level since August 2016. In developed markets, the main event was the French election, with Emmanuel Macron’s convincing second round which led to some healthy gains in European markets and the euro and kept developed markets on their positive trajectory. On the local front, markets had an indifferent month, as more tempered growth expectations and declining commodity prices negatively
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Market Update April 2017

Markets continued their positive run in April; despite investors growing more wary of the global reflationary theme that has promoted gains since the Trump election in November last year. Emerging markets equities were once again out in front, delivering higher returns than their developed peers for the month. Positive sentiment fuelled by expectations of earnings growth in emerging markets continues to underpin investor confidence and flows. In the developed world, rising geopolitical tensions in Syria and North Korea combined with more muted levels of optimism towards global reflation trades subdued markets for much of April. However election results and prospects
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Market Update March 2017

The month of March ended on a somewhat disheartening note, with South Africans waking up to the shocking news of yet another cabinet reshuffle which resulted in the unceremonious sacking of the finance minister and his deputy after market close on the 30th March. This abruptly ended the growing optimism South Africa has enjoyed of late as a result of positive emerging market sentiment, a strengthening currency and declining inflation. Understandably Friday 31st March was a negative trading session on the market which saw interest rate sensitive assets (bank shares, bonds and listed property in particular) come under pressure. Despite
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Market Update February 2017

February was a positive month for global markets. The shortest month of the year passed without any major surprises, with the common thread of economic optimism balancing against political uncertainty. Donald Trump was the obvious talking point with further hyperbole regarding his policy stance, whilst increasing scrutiny in Europe also played a dominate role. Within equities, strong economic and corporate data in the U.S. helped push equities higher. A similar theme was evident elsewhere, as emerging markets saw a material increase that edged out developed markets and added to an apparent recovery that is underway (see below image).   On
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Market Update January 2017

  December was a positive month for markets, capping off a tumultuous year that was punctuated by local and global political events. On the global front, it proved to be a relatively busy month littered with important central bank meetings and political events. The U.S. Federal Reserve decision to raise interest rates did not come as a surprise, and as such, the move had a negligible effect on global markets in US dollar terms. However, in only the second hike since the global financial crisis, investors did take note of the more hawkish tone regarding further moves in 2017. Global
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