Global Equity markets continued their rally in December (the MSCI World Index was up +4.2% in USD), but a stronger rand weighed against SA investors’ international investments. In rand terms global equities were down 1%. Despite expectations that global economic output will shrink by 4.4% in 2020 and worries about an acceleration in global COVID-19 infections, markets looked to the future focusing on additional policy stimulus, low interest rates and low inflation.
The local equity market ((+4.2%) outperformed global markets -1.0%) in rand terms over the month. Cyclical sectors Property (+13.7%) and Resources (+9.5%) continued their strong performances, followed by Financials (+8.3%), while Industrials (-1.1%) continued to be held back somewhat by a stronger rand. SA Bonds returned 2.4% over the month.
Only 10 shares in the JSE Top 40 failed to end the month in the green, while 12 shares rose by more than 10%. Top performers were Anglo American Platinum (+28.1%), Discovery (+24.6%) and Impala Platinum (+24.1%).
The Rand gained further against the major currencies as general risk appetite increased, gaining 5% against the US Dollar, 2.7% against the Euro and 2.5% against the British Pound. It also gained 0.5% against the Australian Dollar and 4% against the Japanese Yen.
The average South African balanced fund is up 5.1% over the past 12 months, under-performing cash, albeit marginally. The average balanced fund delivered only 3.5% p.a. over the past 3 years, an extremely disappointing outcome for investors who have by now had to endure more than 5 years of disappointing low digit annual returns.
Source: Boutique Investment Partners