Globally markets continued its positive trend into the new year before volatility picked up towards the end of the month. The brief flare-up in tensions between the US and Iran were less disruptive to markets. After some optimism around the signing of a phase one trade deal between the US and China, the deadly coronavirus outbreak in China came as an external shock and abruptly altered market sentiment. Safe haven instruments like gold performed well in January. Emerging market equities suffered the most from the shift in sentiment and experienced the outflows. Locally the year started on a disappointing note as load shedding resumed earlier in the month than expected and the World Bank revised SA’s 2020 GDP growth forecast lower to 0.9%. The SARB cut rates with 25bp in January as inflation dipped below 4%, giving some relief to cash-strapped consumers. The Rand depreciated in January as market flows away from
the EM basket in a risk-off theme.
The JSE All Share Index (down 1.7%) delivered negative performance in January. Financials (down 5.2%) were the worst performing sector with Resource stocks (down 3.5%) and Industrials (up 1.6%).
Both Mid-cap shares (down 3.1%) and Large-cap (down 1.4%) performed poorly this month while Small-cap shares (-0.7%) were marginally negative.
The MSCI World Index ended the month down 0.6% in US Dollar terms. Emerging Market equities underperformed their Developed Market peers and ended the month down 4.7%.
Both the South African Listed Property sector (down 3.1%) and the SA REITs sector (down 4.6%) managed to underperform cash for the month.
The Rand depreciated 7.3% against the US Dollar, 5.9% against the Euro and 6.7% against the Pound Sterling.
In January the Gold price (up 4.2%) outperformed both the Platinum price (down 1.3%) and the Oil price (down 11.9%) in US Dollars.
