Back to all articles

Market update: March 2017

| Market Forces

South African economic data released during March were mixed. Statistics SA reported that the local economy had contracted by 0.3% in the fourth quarter of 2016.The next day Ernst & Young released a report showing that the total headline earnings by Barclays Africa, Capitec, FirstRand, Investec, Nedbank and Standard Bank grew by only 6.6% in 2016 compared to 16.5% in 2015. This is a seven-year low.
Some of the good news locally included an easing of consumer inflation from 6.6% in January to 6.3% in February, while producer inflation also slowed to 5.6% in February. The country’s current account deficit also narrowed to its lowest level in six years. On 30 March the SA Reserve Bank kept the repo rate unchanged and signalled that it’s likely reached the end of its interest rate hiking cycle. However, the celebration was short-lived as on that same evening President Jacob Zuma orchestrated an important Cabinet reshuffle, which left Minister Pravin Gordhan without a portfolio. Deputy Finance Minister Mcebisi Jonas was also replaced. Four days later Standard & Poor’s downgraded local currency SA debt to one notch above non-investment (junk) grade and foreign currency SA debt to junk status.
The South African economy  is often counter-cyclical to developed and other developing market economies and this theme came through strongly in March. While inflation is easing locally, European consumer prices rose 2% in February from a year earlier. US consumer inflation is back and prices are up 2.7%, the most in four years, while Chinese producer inflation rose by 7.8% from a year earlier. As as result, the Fed  hiked the federal funds target range to 0.75-1.0% and the European Central Bank alloted the final round of its zero-interest rate four-year loans.
On a global political level, Prime Minister Theresa May officially launched the Brexit process with a six-page letter hand-delivered in Brussels. The British economy is yet showing little despair in the wake of the unexpected Brexit outcome. UK unemployment even unexpectedly declined to 4.7%, the lowest since 1975, but basic wage growth slowed to 2.3%. In the US, following President Donald Trump’s speech to Congress at the start of March, the Dow Jones broke through the 21 000 barrier for the first time ever.
Despite the political disappointments locally, markets held their own during March 2017. The FTSE/JSE All Share Index (ALSI) gained 2.7% on a total return basis, mostly driven by consumer goods and services, particularly media and telecommunication companies. The SA Listed Property Index eked out 0.1% for the month and the All Bond Index (ALBI) and cash returned 0.40% and 0.63% respectively.
In dollar terms the MSCI World Index gained 1.1% and the MSCI Emerging Markets Index ($) returned 2.5% to dollar investors. For South African rand investors the 2.5% depreciation of the rand against the dollar more than trebled the MSCI World Index gain when converted back to rand.

Sanlam Investments consists of the following authorised Financial Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF)(Pty) Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Radius Administrative Services (Pty) Ltd (“Radius”), Blue Ink Investments (Pty) Ltd (“Blue Ink”), Sanlam Capital Markets (Pty) Ltd (“SCM”), Sanlam Private Wealth (Pty) Ltd (“SPW”) and Sanlam Employee Benefits (Pty) Ltd (“SEB”), a division of Sanlam Life Insurance Limited; and has the following approved Management Companies as defined in the Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”): Sanlam Collective Investments (RF)(Pty) Ltd (“SCI”) and Satrix Managers (RF)(Pty) Ltd (“Satrix”).
Although all reasonable steps have been taken to ensure the information on this website/advertisement/brochure is accurate, the Sanlam Collective Investments (RF) (Pty) Ltd / Satrix Managers (RF)(Pty) Ltd (Sanlam Collective Investments) does not accept any responsibility for any claim, damages, loss or expense; however it arises, out of or in connection with the information. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. The information to follow does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium- to long-term investments. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available from the Manager, Sanlam Collective Investments (RF) Pty Ltd / Satrix Managers (RF) (Pty) Ltd, a registered and approved Manager in Collective Investment Schemes in Securities. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the Manager, free of charge. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of the portfolio and the investor will differ depending on the initial fees applicable, the actual investment date, and the date of reinvestment of income as well as dividend withholding tax. Forward pricing is used. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The performance of the portfolio depends on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. Lump sum investment performances are quoted. The portfolio may invest in other unit trust portfolios which levy their own fees, and may result is a higher fee structure for our portfolio. All the portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The fund may from time to time invest in foreign instruments which could be accompanied by additional risks as well as potential limitations on the availability of market information. The Manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates. The portfolio management of all the portfolios is outsourced to financial services providers authorized in terms of the Financial Advisory and Intermediary Services Act, 2002. Standard Bank of South Africa Ltd is the appointed trustee of the Sanlam Collective Investments scheme/Standard Chartered Bank is the appointed trustee of the Satrix Managers Scheme.
Print Friendly, PDF & Email
Show Comments

Comments are closed.

Forex rates by TradingView