February 2023 Update
F&A Monthly Update | FEBRUARY 2023
What a fascinating world we live in! No matter where you look, there is noise, and not much of it is (seemingly) reassuring. I have been working on penning a thought piece around my views on SA, politics and more. This will be sent in a separate piece in the coming week, so please keep an eye out for that! 👀
For now, please enjoy our Monthly Commentary below from Brendan!
Sending love
Richard and the F&A team
February 2023 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
GLOBAL UPDATE
Whilst inflation continues its downward trend, hopes for easy monetary policy have begun to fade. The strength of developed economies and, in particular, the US jobs market has led to a “higher for longer” mantra, so whilst the Federal Reserve might not look to hike rates much more, they are also unlikely to cut rates soon either, certainly not while inflation persists at high levels and potential for inflation remains high. It should be noted that much of the recent revival in risk sentiment was led by China “reopening”, and the country has been in a quiet period insofar as economic reporting goes (data for January and February is expected in March).
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. Follow the link below for more detail on events that transpired in the month.
LOCAL UPDATE
Over the past month the dominant feature of South African markets was the weakening of the rand amidst continued load-shedding, greylisting, and tight global monetary policy. Perhaps it is the fatigue of perpetual uncertainty or anticipation US inflation data, but markets had a muted response. In general, Developed Market equities led the way, European markets outperformed whilst Commodity sensitive regions and companies lagged. Of the local asset classes SA Equity performed worst (-2.3%), dragged down by the Resources sector (-12.5%).
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