For our investors investing in Morningstar Managed Portfolios, click below to access the latest performance snapshot, market commentary and market performance summary:
Morningstar SA Managed Portfolios Morningstar Global Managed Portfolios (USD) Market Commentary - SA and Global Market Performance Summary - SA and Global
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For our investors investing in Morningstar Managed Portfolios, click below to access the latest performance snapshot, market commentary and market performance summary:
Morningstar SA Managed Portfolios Morningstar Global Managed Portfolios (USD) Market Commentary - SA and Global Market Performance Summary - SA and Global Just as we thought Covid-19 was behind us, 2022 bombarded us with an array of new curve balls. From the war in Ukraine, inflation last seen in the 70s, rising interest rates and global markets experiencing drawdowns that rank as one of the worst on record, investors had very little (if any) place to hide. It almost feels like there’s a new headline about a new disaster happening somewhere around the world every day and quite frankly, it’s rather depressing. In the words of Peter Lynch, “You can’t see the future through a rearview mirror.” Imagine having to drive your car up a steep hill, with numerous bends and turns, not looking through your windshield and only being guided by the view in your rearview mirror – it’s a pretty terrifying thought. Given that we drive by looking out the windscreen and not by looking in the rearview mirror, I want to change how we are looking at this crisis. Market and Economic summary In March both market and news headlines were dominated by the war in Ukraine. Developed markets were quick to introduce sanctions against Russia and individuals linked to Putin. During the month, markets tried to digest the impact that sanctions would have on both companies and economies worldwide. Most market participants questioned the impact that higher commodity prices (oil and wheat in particular) would have on inflation as well as global growth expectations. The next point to ponder was how central banks would react to the changing landscape. Global equity markets remained volatile and ebbed and flowed on the news being reported from Ukraine. The US Federal Reserve (Fed) approved a 0.25% rate hike - the first increase since December 2018. Fed officials also signalled an aggressive interest rate hiking path ahead in a bid to control inflation expectations. In partnership with Morningstar: On the South African front, the local equity market and the rand have been incredibly resilient. The FTSE/JSE All Share Index is up around +2% year-to-date (as at 28 March 2022) and the rand has strengthened by roughly 9% against the US dollar since the start of 2022. Across the globe, inflation and interest rates are heading one way and that is up. With ongoing global uncertainty and volatility, South African investors are left wondering what the implication of this global turmoil could be on their investments locally. South African Market Update South African equities ended the month in positive territory, outperforming other developed and emerging markets on the back of strong performance from financials and commodity counters. Local bonds also had a positive month despite December’s inflation coming in higher than expected. Their performance was supported by the relatively attractive yields on offer, which remain above the middle of the inflation target. Local listed Property had a volatile month and ended January in negative territory. The large index constituents had negative performance as the hawkish rhetoric from global central banks affected market sentiment. The rand had positive performance against major developed market currencies over the month, strengthening against the US dollar, the euro and the pound sterling. South African Economic Update SA headline CPI increased to 5.9% year-on-year for December (from 5.5% in November). The largest contributor to the increase in headline CPI was transport, driven by rising petrol and diesel prices. Higher prices in food and non-alcoholic categories also contributed to the increase in inflation. The South African Reserve Bank (SARB) increased the repo rate by 25bp to 4% in January and revised its inflation forecast for 2022 from 4.3% to 4.9%. The SARB also revised its economic growth forecast for 2021 from 5.2% to 4.8% to account for the contraction during the third quarter of 2021 caused by the Omicron Covid-19 variant-led disruptions. SA’s trade surplus narrowed in December to R30.14 billion, from a surplus in November of R35.8 billion. In partnership with Morningstar: A Russian invasion of Ukraine could materially disrupt the global oil supply in several ways, but none are likely, in our view. As Russia currently exports around 5 million barrels a day of crude oil, Iran-style sanctions specifically targeting Russian oil exports could theoretically wreak havoc on oil markets, but they are unlikely, in our view. Given that energy exports account for 60% of all Russian exports and 30% of the country’s GDP, this would seem like a powerful deterrent or punitive response if an invasion takes place. |
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January 2025
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