South African Market Update The South African equity market also moved higher in the month, however, local equities lagged other emerging markets, which rallied significantly during July. The local market was weighed down by weak performance from some large industrial index constituents. There was divergent performance from a sector perspective, with resources (particularly gold and platinum counters) being the most significant driver of positive performance. Local bonds ended the month higher, supported by the attractive yields on offer relative to the declining yields on cash, subsequent to the interest rate cuts by the South African Reserve Bank (SARB) of 3% since the start of the year. Local listed property had a poor month, with disappointing company earnings updates and concerns around the prospects of physical property as an asset class acting as headwinds for the sector. Broad US dollar weakness was supportive of the prospects of the rand against the greenback, while the local currency gave up some ground against both the euro and the pound sterling. South African Economic Update The SARB cut the repo rate by another 0.25% at the July Monetary Policy Committee (MPC) meeting, revising down its inflation and growth forecasts at the same time. This brings the policy rate to a level of 3.5%, its lowest in close to 50 years. SA headline CPI rose to a year-on-year figure of 2.2% to the end of June (from 2.1% in May), well below the midpoint of the target range of 4.5%. SA’s terms of trade continued to improve in June, with the trade balance widening further to a surplus of R47 billion (the largest since January 1990), as exports jumped 10% to R116 billion and imports fell 19% to R70 billion. Chart of the month: The performance of the US equity market year-to-date has been largely driven by those companies with the biggest market. See below for a summary of the key market movements for the month of July:
Source: Morningstar
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