The difficulties in the world’s political and economic circles remained with us during October and in order for us to grow, we will need a calm and growing world.
Looking at the 7.6% positive stock market movement during October, it would appear that investors paid very little attention to any of these. The worries about Chinese growth are abating, with evidence pointing to its growth stabilising. US economic data has been mostly quite good which has been very supportive to markets across the globe.
The so-called “double bottom” in global and local stock markets worked extremely well over the past month, with all stock markets bouncing strongly off their 2nd low point in the month. So all-in-all what the global and local stock markets did in October probably confirmed the continuation of the bull market although most of the growth was achieved in the industrial index with some big shares hitting record highs including SAB, Naspers,
Richmond, AVI. Resources continued to lag but gained 5.9% after Gold (11.5%) and Platinum (7.9%) shares responded positively to improved precious metal prices.
After a decade of war in the destabilised Middle-East a mass exodus to especially Europe followed. It is the biggest movement of people since the WWII. This influx of foreigners bodes ill for welfare and crime in the affected countries, not to mention xenophobic attacks. However, it is not all doom and gloom – the ageing European society has led to a dearth of taxpayers and by absorbing the migrants into European society this problem can be solved.
The biggest question remains around the recovery in China. It is now widely believed that the economic figures that the government produces is inflated when compared with the underlying economy. This has led to an emerging markets superstorm which is continuing unabated with $1 trillion flowing out of these stock markets in 2015. To put this in perspective it is roughly double that of the 2008 financial crisis! South Africa is no exception with its collapsing currency and low growth it joins its peers that are in recessions and have already had ratings downgrades. How do we fix this? We need a bland and boring world where Greece is resolved, Putin is under control, there is honesty over the Chinese economy and clarity over the timing of the US interest rate increases. So, it is not all doom and gloom, but based on the above, the road is still a long and rocky one.
That said, in an ever changing investment environment we need to adapt and change for in adversity come opportunities. Our selected team of investment professionals has acted on these challenges and will continue to exercise discretion as the opportunities present themselves. We are pleased with overall performance year to date but fully understand that this is a marathon and that the race is not won after the first lap.
