The “phase 1” trade deal between China and the US helped catalyse a rally in emerging market (EM) stocks and currencies, dragging the rand (+4.7% in December) and the local bourse (FTSE/JSE Capped SWIX Index [Capped SWIX] +3.1% in December) with them. The December rally helped the Capped SWIX end the year 6.8% stronger and the annual US dollar return of 9.8% left it as the only major global index to not reach double-digit US dollar returns for the year. Platinum shares were again leading the way, up another 20% to cap a year in which their share prices tripled! Gold shares continued the rollercoaster bouncing back from a double digit sell-off in November to post a double-digit gain in December, leaving gold stocks up 120% for the year. Gold and platinum shares accounted for 80% of the Capped SWIX performance in 2019 and almost half of December’s performance. Naspers was the other key contributor in December as it combined with Prosus to end the month up 8%, in aggregate, helped by rand strength and a rally in Chinese shares. Sasol finished an otherwise disappointing year with a strong performance, up 15% as it was buoyed by a rally in the oil price and the hope that it may avoid a capital raise.
Beyond Naspers and the precious metal stocks the SA Inc. component of the index had a largely disappointing month to cap a disappointing year. Apart from Capitec (+31%), Investec (+10%), MMI (+32%) and Clicks (+37%) it was hard to find a SA Inc. share with a positive performance for 2019. There were plenty of major SA Inc. shares that delivered significant losses for the year including Nedbank (-17%), Discovery (-23%), KAP (-46%) and Netcare (-21%) with some of the worst performances for 2019 coming from the retail sector including Massmart (-50%), Shoprite (-32%) and Truworths (-41%). Property shares also had a rough end to another forgettable year (-2% in December) for a total return of just 2% in 2019 including 9% of dividends. The rand-hedge component of the local bourse made up of companies generating earnings predominantly outside SA had a decent December, despite a strong currency headwind, thanks largely to British American Tobacco which was up over 5% for December and 36% for the year.
SA government bonds benefited from the EM rally as the benchmark R186 government bond yields dropped 0.2% in December to end the year at 8.25%, still an impressive real yield given Stats SA’s announcement of a decade-low 3.6% inflation rate during the month.