Investment Market Update

NOVEMBER 2023

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

KEY NUMBERS

9.1%

November ZAR return of the ALPI

-11.5%

Platinum price return over the last 12 months


R26.6bn

SA trade deficit widened by

LOCAL MARKET

_______________________

South African (SA) markets rallied along with global markets; however local asset classes underperformed their global counterparts.

The best performing asset classes came from global property and global equity followed by local property. Although local bond yields rallied strongly in the month, it was not sufficient to beat the unhedged global bond market. This was due to the rand broadly weakening against developed market currencies except for the US dollar where it remained flat. As the environment favoured riskier assets, local cash was the worst performing asset class

Although the rand performed weaker than most other currencies, foreign investors were net buyers of SA bonds for the first time since April. However it wasn’t all good news locally, South Africa’s recorded a trade deficit as exporting woes continue to be an economic headwind.

SMARTIE BOX IN RANDS:

GLOBAL MARKETS

__________________________

November saw a big rally in markets due to positive news around falling inflation and interest rate expectations.

Three of the major developed economic areas (UK, US and euro area) all saw their inflation fall more than expected, effectively closing off the chance of further rate rises and potentially paving the way for those central banks to cut rates towards the middle of next year. Needless to say, lower rates also mean less chance of a recession. Markets are now pricing in rate cuts of 1-1.5% in the next 12 months in the UK, US and euro area. This provided a boost to asset prices with bond yields falling, and thus bond prices rising, in anticipation of lower interest rates; and equities buoyed by an uplift in sentiment.

US markets reported their second-best November in over 40 years. After six consecutive months of rising US 10yr bond yields, last month saw the largest one-month decline since the end of 2008. It is no surprise then that global risk-on sentiment spurred strong positive results across the asset classes, with global property reporting the largest growth US dollar terms.

MOVEMENTS

 

  • The JSE All Share Index jumped higher on the back of positive global market sentiment (up 8.6%).
  • Industrials (up 10.1%) and Financials (up 8.3%) led the charge in positive returns, with Resources (up 6.4%) flowing close behind.
  • Small-caps (up 4.8%), Mid-caps (up 5.3%) and Large-caps (up 9.1%) similarly boasted large gains across the board.
  • The S&P SA REIT sector (up 6.6%) and the SA Listed Property sector (up 9.1%) reported record gains.
  • SA Nominal Bonds (up 4.7%) and Inflation Linked Bonds (up 4.2%) were well in the green as the month came to a close.
  • Developed Market Equities outperformed their Emerging Market peers in US Dollar terms, with the MSCI World Index up 9.4% and the MSCI Emerging Market Index having gained 8.0%.
  • The Rand had a poor month, depreciating against the major currencies; relative to the US Dollar (Rand depreciated 1.1%), the Euro (Rand depreciated 4.3%) and the Pound Sterling (Rand depreciated 5.5%).
  • The commodities sector had mixed results in November as Gold (up 2.7%) gained and Platinum (down 0.6%) faltered, while  Brent Crude (down 5.2%) fell sharply for its second consecutive month.

MONTHLY RETURNS: