Global markets continued with the increased volatility experienced at the end of January. It was largely attributable to the sharp increases of coronavirus diagnosis’ found in Italy, South Korea and Iran which shocked markets at the end of February and caused global markets to retreat. The oil price plummeted to its lowest levels in almost 3 years due to the COVID-19 outbreak and a decrease in global demand for the commodity. The last week of February marked the S&P 500’s worst week since the 2008 financial crisis as it was down 11.5% for that week. This sharp decrease was fuelled mostly by the worry that measures to contain the virus would affect corporate profits and economic growth and worsen even further in the near future. Investors were not able to find relief in safe haven instruments as even the gold price was down 1.2% for the month. In South Africa the minister of finance, Tito Mboweni, delivered his annual budget speech amidst the fears of a very possible Moody’s downgrade in March. His speech yielded some interesting results as personal income taxes were lowered although expected to increase. Mboweni also shared plans to decrease the public sector wage bill by R 160 billion over the next three years in order to reduce the country’s debt burden. The SA market reacted positively to the budget speech, however time will tell if these plans are likely to materialise into anything.
The JSE All Share Index (down 9.0%) delivered large negative performance in February.
Resource stocks (down 11.6%) were the worst performing sector with Financials (down 9.5%) and Industrials (down 7.0%).
Mid-cap shares (down 12.9%), Large-cap (down 8.4%) and Small-cap shares (down 13.3%) all had a very bad performance in February.
The MSCI World Index ended the month down 8.4% in US Dollar terms while Emerging Market equities outperformed their Developed Market peers and ended the month down 5.3%.
Both the South African Listed Property sector (down 15.7%) and the SA REITs sector (down 17.9%) were the biggest losers for the month.
The Rand depreciated 4.9% against the US Dollar, 4.0% against the Euro and 1.6% against the Pound Sterling.
In February the Gold price (down 1.2%) outperformed both the Platinum price (down 10.1%) and the Oil price (down 13.1%) in US Dollars.
