Market Update South African equities fell during the month of February in line with other global equity markets, with only four shares in the top 60 of the JSE finishing the month with a positive return. Local bonds reacted positively to the budget speech by Finance Minister Tito Mboweni, however, the asset class lost some ground towards the end of the month as yields moved higher (moving prices lower) due to sales by foreigners on the back of the de-risking trend. Local listed property came under severe pressure during the month, as the sector faced headwinds from weak local economic conditions and global risk aversion to those asset classes perceived as risky. The rand was weaker against major developed market currencies during the month, which masked the negative contribution from global equity allocations slightly. Economic Update Finance Minister Tito Mboweni delivered an ambitious budget speech during the month, with the minister announcing the intention to reduce expenditure by R261 billion over the next three years, including a reduction in the government wage bill of R160 billion. The minister also announced a downward revision of R63 billion in estimates of tax revenue for the 2019/2020 fiscal year relative to the 2019 budget, which is likely to lead to a budget deficit of 6.3% for 2019/2020. Headline inflation moved up slightly during the month to a year-on-year figure of 4.5% to the end of January, driven higher by the base effect of an increase in the price of transport in particular. See below for a summary of the key market movements for the month of February:
*All data is sourced from Morningstar Direct as at 29/02/2020. The performance of South African asset classes is quoted in rands and the performance of global asset classes is quoted in US dollars. Source: Morningstar
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