Investment Market Update
FEBRUARY 2023
What has been happening in local & global markets in the month of February
KEY NUMBERS
R367 BILLION
In investment committments raised by the 4th SAIC
R1 BILLION
The estimated monthly theft from Eskom
R18.42/$
The rand weakened to levels not seen since the pandemic
LOCAL MARKET
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Locally, it was a busy month for markets, as the SONA, the Budget Speech, and South Africa’s Greylisting were all points of interest for investors.
This month saw a weakening of the rand amidst continued load-shedding, greylisting and tight global monetary policy. We saw Developed Market equities lead the way, European markets outperformed whilst Commodity sensitive regions and companies lagged.
Mining stocks sold off heavily, as there seemed to be no light at the end of the tunnel for loadshedding. However, insurers and banks kept the financial index afloat despite a worsening macro environment. On the fixed income front, SA bond yields rose on the back of inflation concerns and inflation-linked bonds eked out a positive return.
LATEST SMARTIE BOX:
GLOBAL MARKETS
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After January’s excellent performance, February markets gave up some of the first month’s growth.
Although the global economy is looking strong and seeing more stable demand, the market focused on the probability that higher interest rates may be sticking around. On the other side of the world, emerging markets were dragged lower by China, as geopolitical tensions with the US rose and investors questioned the long-term growth of the economy.
The strength of the US jobs market has reinforced the Federal Reserve’s stance on “higher for longer” rates and while they may not look to hike rates much further, they are also unlikely to cut rates sooner. The waning risk sentiment amidst higher interest rates hurt Real Assets, although these have been year-to-date outperformers, the worst performance in February was seen in commodity exposed equity regions and sectors.
MOVEMENTS
- The JSE All Share Index dropped last month strongly (down 2.2%).
- Financials (up 2.7%) and Industrials (up 1.6%) ended comfortably in the green, while Resources (down 12.5%) plunged sharply into the negative.
- Small-caps (up 0.8%) ended marginally higher, as Mid-caps (down 0.2%) and Large-caps (down 2.4%).
- The S&P SA REIT sector (down 1.6%) and the SA Listed Property sector (down 0.7%) ended the month lower.
- SA Nominal Bonds (down 0.9%) had a poor month while Inflation Linked Bonds (up 0.4%) ended slightly positively.
- Developed Market Equities outperformed their Developing Market peers in US Dollar terms, with the MSCI World Index ending down 2.8% and the MSCI Emerging Market Index failing 6.5%.
- The Rand depreciated against the major currencies; relative to the US Dollar (Rand depreciated 5.1%), the Euro (Rand depreciated 2.8%) and the Pound Sterling (Rand depreciated 3.5%).
- The commodities sector had a negative month, with Platinum (down 5.6%), Gold (down 5.2%) and Brent Crude (down 0.7%).
ASSET CLASS RETURNS (1 MONTH):
