South African Market Update South African equities tracked global markets lower during the month, weighed down by poor performance from some large industrial and resource shares, despite strong performance from the local banking sector. Local bonds ended the month largely flat, as appetite for emerging market debt remained subdued, despite the attractive yields on offer. Local listed property continued to face headwinds from uncertainty regarding earnings and distributions, which has deterred investment in the asset class due to the historical reliance on income as a source of return. The rand was stronger against most major developed market currencies for the month, which detracted from the contribution of the performance of global asset classes. South African Economic Update South Africa moved to a level 1 lockdown on 21 September, as daily local Covid-19 infections continued to decline during the month and the recovery rate improved to a figure of around 90%. SA’s Q2 2020 GDP data was released during the month, indicating that GDP fell 17.1% year-on-year for the second quarter, as the hard lockdown took its toll on the local economy. South African Reserve Bank Governor Lesetja Kganyago announced that the Monetary Policy Committee has decided to leave the repo rate unchanged at 3.5%. The decision by the MPC was split, with 2 of the 5 members favouring an interest rate cut. SA headline CPI fell to a year-on-year figure of 3.1% to the end of August (from 3.2% in July), close to the bottom end of the target range of between 3% and 6%. Chart of the month: Daily confirmed Covid-19 cases continued to fall in South Africa during the month as the country moved to a level 1 lockdown. (Source: Statista) See below for a summary of the key market movements for the month of September:
Please click on the links below to download the Market Summary PDF and the Market Commentary PDF, intended to be ‘end investor friendly’ Morningstar Market Commentary SA September 2020.pdf 2020_09_Morningstar Market Summary.pdf *All data is sourced from Morningstar Direct as at 30/09/2020. The performance of South African asset classes is quoted in rands and the performance of global asset classes is quoted in US dollars.
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