Investment Market Update
NOVEMBER 2024
What developments have unfolded in local and global markets throughout the month of November?
52
Record highs by the S&P 500 this year
$10,8 billion
Spent online in the US on Black Friday
2 600%
Nvidia’s earnings increase since Chat GPT launched
EMERGING MARKETS VS THE RAND
US DOLLAR VS THE RAND
EMERGING MARKET EXCHANGE RATE VS USD
GLOBAL MARKET
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In November, the U.S. election concluded with Donald Trump confirmed as president-elect. What was initially anticipated to be a close contest turned into a decisive victory for the Republicans, who secured the Electoral College, the popular vote, the House of Representatives, the Senate, and all seven battleground states of the election year.
This outcome led to a strong performance in developed market equities, while emerging market equities saw a modest sell-off, driven by concerns over the potential impact of the new administration’s protectionist policies on developing economies.
Protectionist measures have become a central theme under Trump’s “America First” agenda since his re-election. This has introduced uncertainty, leading to a stronger U.S. dollar driven by risk aversion rather than confidence in the economy’s strength. The effects of these policies on inflation remain unclear, but economic disruptions often correlate with rising inflation.
Geopolitical tensions have escalated since Trump’s election victory, fueled in part by uncertainty over future policies, particularly concerning China. Joe Biden has also influenced these dynamics, with the U.S. allowing Ukraine to use American long-range missiles to strike deep into Russian territory. The implications of this decision are uncertain. Meanwhile, tensions in the Middle East and Syria persist.
Central banks worldwide have recently entered a rate-cutting cycle. While markets initially expected significant cuts, inflation has proven more persistent than anticipated in regions such as the U.S., Canada, the UK, Brazil, and the EU. As a result, the trajectory of future interest rates remains uncertain.
ANALYTICS - NOVEMBER COMMENTARY:
SMARTIE BOX IN RANDS:
LOCAL MARKETS
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South African equities experienced another challenging month, largely due to falling commodity prices, which weighed on resource stocks and pulled the index lower. In contrast, retailers delivered strong performance during the same period. Headline inflation in South Africa decreased to 2.8% in October, prompting the South African Reserve Bank (SARB) to cut interest rates by an additional 25 basis points at the November Monetary Policy Committee meeting.
The SARB’s composite leading indicator recorded its sixth consecutive month of year-on-year growth, driven by optimism surrounding the Government of National Unity (GNU), a stronger Rand, the absence of load-shedding, and other positive factors.
Lower oil prices and a stronger currency have contributed to subdued inflation, with October’s annualized inflation rate at 2.8%, below the SARB’s target band of 3-6%. Domestic demand remains weak, and the Reserve Bank’s restrictive policy rate is unlikely to stimulate significant growth. If inflation stays low, there may be increasing pressure on the SARB to adopt more aggressive rate cuts.
Since Donald Trump’s victory in the U.S. presidential election, markets have grown more concerned about global trade and the potential impact of tariffs. This uncertainty has strengthened the U.S. Dollar and weakened emerging market currencies. For South Africa, ABSA research suggests that losing participation in the Africa Growth and Opportunities Act (AGOA) would have limited overall economic impact.
In a positive development, S&P Global revised its outlook on South African government debt from “stable” to “positive.” While this is a step toward regaining investment-grade status, significant progress is still needed before rating agencies consider upgrading the country’s credit rating.
- The JSE All Share Index slipped down 0.9% for the second month in a row.
- Financials (up 0.5%) and Industrials (up 0.5%) were up slightly while Resources (down 6.6%) felt the effect of weaker commodity prices.
- Small-caps (up 3.6%) held up well for the month while Mid-caps (down 0.1%) and Large-caps (down 1.6%) ended the month in the negative.
- Both the S&P SA REIT sector (up 1.2%) and the SA Listed Property sector (up 1.7%) showed some growth over the month.
- SA Nominal Bonds (up 3.0%) and Inflation Linked Bonds (up 0.9%) benefited from improved fiscal outlook and optimism.
- Developed Market Equities outperformed their Emerging Market peers in US Dollar terms, with the MSCI World Index up 4.6% and the MSCI Emerging Market Index down 3.6%.
- Relative to the US Dollar (Rand depreciated 2.2%), the Euro (Rand appreciated 0.6%) and the Pound Sterling (Rand depreciated 1.0%).
- Commodities prices broadly fell in November, with Gold (down 3.0%), Platinum (down 4.2%) and Brent Crude (down 0.3%).
MONTHLY RETURNS:
