The quarterly period under review was mostly a positive one for South Africa incorporated, with the Johannesburg stock exchange ending on 83749. After a turbulent run-up to the general election, South Africa once again managed to pull itself back from the precipice and formed what can only be described as the best outcome with the new Government of National Unity (GNU). Most South Africans breathed a collective sigh of relief, as the alternative could have been devastating if the ANC had decided to partner with either the EFF or MK. As a result, we have seen a stronger Rand and optimism around South African focused companies.

However, we are now in uncharted territory and it may take some time for the new government to stabilise and hopefully introduce positive political reform, which will be business friendly and help reduce the disastrous unemployment problem that has been plaguing the country for some time.

Despite all the hard work that we know needs to be done, it is somewhat encouraging that Investec’s Chief Economist, Annabel Bishop, is of the view that the business and government collaboration remains firmly on track to rebuild SA’s infrastructure (energy, transport and logistics) and address crime and corruption. President Ramaphosa has also highlighted the state’s commitment to “urgently implement the (collaboration’s) reform agenda to restore confidence and sentiment-essential drivers of investment, inclusive economic growth and job creation” and hopefully we will see consistent and steady progress in this regard.

Internationally, the outcome of the UK election was quite predictable, which meant the market could largely price it in. All eyes are focused on the political arena in the United States where elections take place in November. Harris versus Trump is going to see some interesting developments between now and then and this political uncertainty will likely cause volatility in global markets.  In Europe equally, there are political concerns combined with the ongoing conflict in this region, which has seen economic growth come under pressure.

We will watch with interest the impact of the UK and US parties’ economic policies over the next three to five years. In the UK, the change of government may have a negative impact on the economy as the new labour government may introduce changes that are not as business friendly as the previous regime.

Globally, there seems to be an indication that inflation is under control and we could see central banks begin to cut interest rates. This has historically been positive for equity markets and does allow the decision-makers the ability to stimulate economies.

India has become an interesting area of focus and an alternate investment destination to China. Strong leadership under Modi and the pro-business approach of government, has recently seen an improved performance in the Sensex “a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange.”

China continues to be an area of concern as a result of the economic slowdown and pressure from the US to reduce dependency on chip and semiconductor products largely manufactured by the Chinese, which has seen this sector struggle.

Unfortunately, war continues to rumble on in areas of conflict, causing significant delays in global trade and shipping in particular. Hopefully, there will be a ceasefire in the Israeli/Gaza conflict in the near future and the Russia/Ukraine conflict de-escalates, although heading into the northern hemisphere winter, we may well see this de-escalation as a result of the harsh winters in this region.

Below is an indication of how the Global Bourses have fared over the last few quarters:

The below graph tracks the performance of the Rand against the US Dollar over a seven-year period:

The below graph tracks the performance of the JSE All Share Index over a seven-year period:  

Once again, we believe that equities, particularly at the moment, offer long-term value and are an excellent asset class for long term wealth creation.

In the words of Albert Einstein: “Life is like riding a bicycle. To keep your balance, you must keep moving.”  So, we will keep moving on-wards and upwards, even in the midst of uncertainty.

Please be aware that our office will be closed on Monday, 23 September 2024 to take advantage of the long weekend and give our staff a much needed and well-deserved break after a very busy financial period.

May we take this opportunity to thank you for your continued support.

 

 

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