ZAR VS Euro
Over the last 20 years the Rand has weakened on average by 5.67% per annum against the Euro. YTD the Rand lost around 3.4% against the Euro, mainly due to SA economic and political instability. R100,000 invested in July 1997 in euro’s, would have given you €20,200. Today, that would be worth R302,000.
SA Market Review
During the first week of June we saw a drop in the 2017- Q1 GDP of 0.7%, putting SA in a technical recession. Negative market sentiment was exacerbated by the release of a controversial mining charter and a public protector report that appears to have called for changes in the SARB mandate.
These factors all contributed to the SA equity market (ALSI) falling by 3.5% in June, reducing its overall YTD performance to 3.4%. The largest detractors during June came from the Industrial sector (-4.2%), which posted its worst monthly performance since August 2015. The downturn was led by Consumer Services, with Travel and Leisure down by 6.9% and Media by 6.3%. In addition, Healthcare (-4.9%) and Construction (-5%) also weighed on the market. SA resources also struggled (-3.1%), with the worst performance coming from Gold Mining (-9.5)%.
Bonds and cash, with YTD total returns o f4.0% and 3.4% respectively, have fared relatively better, or inline, with the SA equity market YTD.
SA Stock Market Volatility – SAVI
Volatility is the price change an Index experiences overtime. Stable price mean slow volatility and vice versa. Volatility tends to decline as stock markets rise and increase as stock markets fall. Some investors prefer lower volatility, though it often results in lower returns. As illustrated below, SA stock market volatility has been relatively low over the last few years, indicating that our market is currently on the expensive side.
Global Market Review
Global stock markets delivered robust gains in Q2-2017 driven by:
- Stronger earnings growth
- Improved global economic data
- Diminished political uncertainty in Europe
Global stock market returns for the Q2-2017 were:
- MSCI World Ex US +5.0%
- MSCI Emerging Markets +6.3%
- US S&P 500 +3.1%
US stock indices rose to new highs during the quarter with Healthcare stocks leading the way. Meanwhile, the US Federal Reserve raised its benchmark rate with 25 basis points in June, to 1.25%. We also saw oil prices having a volatile quarter on concerns about higher than anticipated global supply.
Finally, global bond prices moved higher during the quarter, boosted by stronger demand and possible waning concerns about inflation.
Sources: Data has been sourced from Morningstar, and reflects market data as at 30 June 2017.
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ADDITIONAL INFORMATION (where applicable)
Performance has been calculated using net NAV to NAV numbers with income reinvested. Full performance calculations are available from the manager on request.
DEFINITIONS (where applicable)
Annualised Return: Annualised return shows longer term performance rescaled to a 1 year period. Annualised return is the average return per year over the period. Actual annual figures are available to the investor on request.
Highest and Lowest: The highest and lowest returns, since launch, for any rolling 1 year period have been shown.