After a tough start to the quarter amongst uncertainty regarding the US-China trade wars globally and weak economic growth locally, September saw some recovery in markets. The South African Reserve Bank kept interest rates unchanged in September (after a 25bps reduction in July) despite the continuing weak economic environment. Global central banks remained dovish with the US reducing rates by a further 25bps in September. September also saw Value stocks rebound after a long period of underperformance (with the MSCI USA Value Index outperforming its growth counterpart by nearly 3%) as small cap stocks bounced in reaction to a combination of accommodative monetary policy, moderately positive economic data as well as slightly improving sentiment surrounding US-China trade wars.
The JSE All Share Index (down 4.6%) struggled over the quarter as market uncertainty saw investors shy away from Emerging Markets in general.
Small-cap shares (up 2.2% in September) struggled in quarter three (down 3.2% from previous quarter end). Mid-cap shares (down 1.8% for quarter three) and Large-cap shares (down 5.2% for quarter three) also struggled. SA Financials (down 6.8%) had the toughest quarter with Resources (down 6.4%) posting similar returns. Industrials (down 2.5%) were the best performing stocks for the quarter.
The MSCI World Index ended the quarter up 0.7% in US Dollar terms while the MSCI Emerging Markets Index (down 4.1% in US Dollar terms for the quarter) was hurt by uncertainty amongst investors.
South African listed property (down 4.4%) had a negative third quarter (after a slight recovery in quarter two) while the SA REITs (down 5.9%) lagged the broader property index.
The Rand depreciated against most major currencies over the quarter, it depreciated 7.5% against the Dollar, 4.1% against the Pound Sterling and 2.9% against the Euro.
The US Dollar Gold price increased by 4.0% over the quarter as investors continued to seek a “safe-haven” amidst ongoing uncertainty. The US Dollar Platinum price ended the quarter up 5.7% while the Brent Crude Oil Price decreased 8.7% US Dollar terms in quarter three.
