In partnership with Morningstar: The father of value investing, Benjamin Graham, is quoted as saying that “in the short run, the market is a voting machine but in the long run, it is a weighing machine”. This advice is particularly appropriate in the current environment where markets appear especially interested in short term asset price movements and less focused on longer term fundamentals.
0 Comments
Market and Economic summary Global equity markets continued to struggle in February as market jitters around US inflation continued to drag markets lower in the first two weeks of February. As concerns of Russia invading Ukraine became a reality in the third week of February, markets moved into a sharp risk-off trade. This meant that money flowed out of emerging markets (EM), anything Russian or linked to Russia and into perceived safe-haven assets such as US treasuries and gold. This drove bond yields lower towards the end of the month and led to EM currencies weakening. Despite the recovery in developed market bonds towards the end of the month, global bonds ended the month lower. There was little room to hide in global markets in February however the two areas of the market that weathered the storm were global energy and materials. 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: Against the backdrop of low interest rates, is the overwhelming narrative that "there is no alternative” (also dubbed the "TINA” theory"). For a while now, “TINA” has been floated as an underlying reason for why the current bull market won't quit. |
AuthorKevin Yeh Archives
January 2025
Categories
All
|