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Investment Market Update

AUGUST 2023

What has been happening in local & global markets in the month of August

KEY NUMBERS

6

New countries added to BRICS

3.8%

US unemployment rate came in higher than expected


5.5% YoY

Increase in manufacturing production

LOCAL MARKET

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Weak markets globally provided a difficult backdrop for South African assets which have typically played a high beta role within emerging markets with South African equity markets reporting its worst month of the year.

The rand sold off strongly on the back of Fed-induced dollar strength while local equities fell, and local bonds continued to struggle. The main detractor was the resources index being led particularly by platinum and gold miners who suffered as China struggles to increase production. The 2023 BRICS summit was hosted in Johannesburg and added 6 new members to the contingent.

SMARTIE BOX IN RANDS:

CONTACT US

GLOBAL MARKETS

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Global equities had a poor month in dollar terms, as China’s deflationary challenges and Europe’s increase in natural gas price crushed optimism regarding the global economy.

Fitch downgraded the US credit rating, driving US real bonds to their highest level since 2009. The MSCI World Index lost more than 10% in August before recovering in the last week of the month. The rally came as US unemployment figures increased and GDP growth for Q2 was revised downwards. Although bad news in the short run, it inspired the markets by cementing the idea that the Fed will hold rates in September. Although they recovered towards the end of the month, both bonds and equities sold off globally.

 

 

MOVEMENTS

 

  • The JSE All Share Index fell sharply over the month (down 4.8%).
  • Resources (down 8.4%) was the worst performing sector and Industrials (down 4.7%) plummeted, while Financials (down 1.6%) dropped slightly.
  • Small-caps (up 1.7%) advanced higher, as Mid-caps (down 3.5%) and Large-caps (down 5.6%) tumbled lower.
  • The S&P SA REIT sector (down 1.5%) retreated and the SA Listed Property sector (up 0.9%) gained slightly.
  • SA Nominal Bonds (down 0.2%) ended the month slightly in the red, while Inflation Linked Bonds (up 0.5%) added incremental growth.
  • Developed Market Equities underperformed their Emerging Market peers in US Dollar terms, with the MSCI World Index down 2.3% and the MSCI Emerging Market Index having dropped 6.1%.
  • The Rand depreciated against the major currencies; relative to the US Dollar (Rand depreciated 6.1%), the Euro (Rand depreciated 4.6%) and the Pound Sterling (Rand depreciated 4.6%).
  • The commodities sector had mixed results, as Platinum (up 2.3%) gained and Gold (down 1.6%) dropped, while  Brent Crude (up 1.5%) continued its trajectory higher.

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