June 2024 Update
F&A Monthly Update | JUNE 2024
What a last month we have had! Following on from my thoughts penned just a couple weeks ago here, we have seen positive developments and some lovely trends starting to present:
Much noise is already coming out from various newly appointed Ministers, noting previous poor governance, maladministration and probable corruption. This transparency, although uncomfortable, is essential in the country’s move to a more accountable environment. This should hopefully lead to prosecutions
The Rand continued to strengthen following developments around the Government of National Unity. The equity markets followed, with the JSE ALSI reaching new all time highs.
The country passed 100 days without rolling blackouts
SA posted its first primary budget surplus in 15 years
KZN and Ethekweni are enjoying a new lease to life under the Government of Provincial Unity with new, qualified role players taking up key positions without the inclusion of MK, and with the dilution of the ANC.
This fresh start at a national and closer to home, provincial level, will come with many teething problems but it constitutes meaningful progress
The trends are undeniably positive close to home. Further abroad, much noise is present as important countries in the rest of the world go to the polls. There seems to be no simple outlooks for many countries around the globe proving that the grass is not always greener on the other side, it is greener where you water it.
Our thoughts and prayers go out to our friends and colleagues in the Cape during these intense storms and flooding.
Onwards and upwards
June 2024 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
GLOBAL UPDATE
June saw mixed results across markets, with varying returns in both bond markets and equity regions. Generally, bond yields fell slightly, supporting fixed income prices, as inflation moderated across most regions, most notably in the UK where inflation dropped to the Bank of England’s target of 2.0% for the first time since 2021. The European Central Bank (ECB) cut interest rates as expected, however the timing of the first rate cut from the Bank of England and US Federal Reserve remain uncertain – although markets still expect them to occur this year. UK and European equities fell, as a surprise snap general election was called in France – causing some uncertainty in European markets. US equities performed strongly as did emerging market equities following the results of the Indian general election and Chinese data that again surprised to the upside.
LOCAL UPDATE
It was an exceptionally favorable month for South African asset classes, marked by the strengthening of the rand, a rally in bond yields, and strong performance in local equities, particularly in financials and property stocks. This was driven by optimism from election results whereby the ANC lost its majority, and a government of national unity was formed. The local market was one of the top performing emerging markets over the month meaningfully outperforming the broader EM indices which in turn outperformed developed markets. Due to a stronger rand, global asset classes underperformed despite reasonable returns in hard currency.