August 2022 Update
F&A Monthly Update | August 2022
Time for another monthly update! As always, we've put together a snapshot of market insights from PortfolioMetrix to bring you an overview of where your investments are headed. Here's your August 2022 update!
August 2022 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
LOCAL UPDATE
The South African (SA) equity market fared slightly better than offshore equities in what has been a difficult month for risk assets globally. Although SA equity outperformed developed markets it underperformed the broader emerging market index driven by underperformance in the resources sector. The best performing asset classes for SA investors were SA cash and bonds as they both provided positive returns. Local bonds performed relatively well in a volatile August as global markets struggled to digest the prospect of further rate hikes. Local and global property were the worst performers with returns of -5.4% and -4.4% (in ZAR) respectively.
GLOBAL UPDATE
August saw another round of central bank rate rises across several economies. Although the US didn’t have a policy meeting, a speech by US Federal Reserve Chairman Powell in late August reinforced messaging around the Fed’s determination to continue to raise rates to reduce inflation. Inflation did show signs of slowing in the US, although it continued to tick up elsewhere as further Nord Stream gas pipeline disruptions by Russia pushed gas prices towards all-time highs in Europe. A trip by U.S. House Speaker Nancy Pelosi to Taiwan raised geopolitical friction between the US and China, but was largely eclipsed by inflation, rates and gas price worries by the end of the month. Higher interest rate expectations resulted in rising bond yields and falling prices, thus negative returns for bond investors. It also impacted on equities as the possibility of a recession loomed nearer.