Equity markets around the globe had a tough August against a backdrop of economic and socio-political news flow which reflected slowing global trade as well as uncertainty with regards to political policy. The US-China “eye for an eye” trade conflict did not do investors (other than those holding US Treasuries and gold) any favours. Emerging markets were not escaping this turmoil with Argentina leading the charge in terms of political upheaval causing the currency to shed 25% of its value against the US Dollar. South African markets struggled not only against a gloomy global outlook but also against weak local economic data, Moody’s rating concerns, a delay in the restructuring of Eskom and political discontent. Except for bonds and some precious metals (gold in particular) most global and local asset classes retreated during August.
The JSE All Share Index (down 2.4%) struggled in August. SA Financial stocks (down 3.7%) struggled the most, followed by SA Industrial stocks (down 3.0%) while SA Resource stocks (down 0.2%) remained relatively flat. Small-cap shares (down 5.8%) were hit the hardest. While Mid-cap stocks (up 0.3%) managed to produce slightly positive returns, Large caps (down 2.7%) also struggled.
The MSCI World Index ended the month down 2.0% in US Dollar terms (although the weakening Rand meant it returned 5.0% in Rand to South African investors). Emerging Markets bore the brunt of investors’ negative sentiment and the MSCI Emerging Markets Index ended the month down 4.8% in US Dollar terms.
Both the South African Listed Property sector (down 3.6%) and the SA REITs sector (down 4.9%) struggled in August as investors’ concerns regarding future earnings in the local market continue.
The Rand depreciated against most major currencies. It lost 7.1% against the US Dollar, 6.5% against the Pound and 6.0% against the Euro.
The US Dollar Gold price increased by 6.5% as investor continue to seek a “safe-haven”. The Brent Crude Oil Price decreased 7.3% US Dollar terms in August while the US Dollar Platinum Price gained 6.1%.
