Positive Gains
The second COVID wave in SA is swiftly reducing. Although there are mixed reports around South Africa’s acquisition and speed of distribution of the vaccine, it seems probable that this year should see a gradual return to normal. Globally, in jurisdictions with more rapid vaccine rollouts, this should be even quicker.
These developments will likely continue to aid the recovery and progress the markets are pricing in. An increase in exposure to risk remains a common global theme, with world indices reporting new record or near record highs. The JSE ALSI broke through 65’000 just last week, with the Rand hovering around and below R15/$. All in all, ongoing predictions that a global recovery will be achieved.
Both our local and global portfolios continue to enjoy positive gains. All portfolios are positive over their past 1-year and seeing as this includes the large pullbacks in March last year, I would suggest it be considered a strong success!
Our monthly commentary is far more summarised than in the past. It is data rich, which we as an industry enjoy, but some may find it overwhelming. If you have any suggestions around how we could improve either our monthly or quarterly pieces, please let us know?
January 2021 Update
This month's piece is compiled by Russell Brown, Investment Analyst, PortfolioMetrix.
Local Update
South African Equities led the way in January while South African property gave back over 3% after two months of strong performance in the asset class. Although the rand weakened over the month, it was not enough for global asset classes to outperform the JSE. The local bourse was primarily driven by sharp gains in industrials with Naspers and Prosus, in particular, performing well, and a few select Basic Material stocks, Sasol and Sappi. Local bonds again offered reasonable performance despite yields rising in the developed world. The SA 10-year yield held steady at around 8.75% providing attractive real yields, particularly appealing to foreign investors in a low global yield environment.
Global Update
January was a mixed month. It started well on optimism over vaccine rollouts, fiscal easing, and the potential for further monetary easing. But markets then reversed as concerns emerged over delays to vaccine rollouts in mainland Europe as well as new strains of COVID-19 becoming more prevalent. January also saw a strange (and legally questionable) battle occur between hedge funds and retail investors (organised via a Reddit social media channel). This massively inflated the share prices of some fundamentally unsound companies (notably GameStop) as the retail investor army bought up stock in large numbers, pressuring hedge funds to take losses on their ‘short’ trades. Follow this link for more detail on events which transpired in the month.