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Local Market Commentary – December 2018

08 January 2019

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by Anchor

The volatility on global markets in December saw renewed investor interest in gold, resulting in broad-based gains among JSE-listed gold mining counters and the resultant share price bounces as the price of the yellow metal strengthened by 5.1% MoM. Buoyed by the surge in gold mining counters and several heavyweight shares (including Anglo American [+16.3% MoM], BHP Group [+15.2% MoM], Richemont [+5.1% MoM], Naspers and Glencore [both up 4.7% MoM]), the JSE ended December in the green with the FTSE JSE All Share Index up 4.1% MoM. The Resi recorded a 12.6% MoM gain outperforming both the Indi-25 (+2.6% MoM) and the Fini-15 (+1.1% MoM).

AngloGold Ashanti (+30.6% MoM) was December’s best-performing share, with the counter lifted by the aforementioned gains in the price of gold and media reports indicating that the firm was considering listing on either the London or Toronto stock exchanges – a move that could see it hive off its remaining SA operations. Gold Fields came in second with a 22.2% MoM gain, followed by the only retail share among the top-20 performers in December – Lewis Group which ended the month 21.1% higher to take the third-best performer spot.

Among December’s worst-performing shares it was a mixed bag with most decliners coming out of the property sector which has been under pressure for most of the year. However, food and construction firms also featured prominently. Tongaat Hulett, dropping by 18.4% MoM, took the top spot and was followed by construction Group, Raubex in second position and RCL Foods in third – these two companies posted MoM declines of 17.9% and 17.4%, respectively.

On the SA macro front, GDP data released in early December showed that in 3Q18 the economy grew by 2.2%, pulling the country out of a “technical recession” and coming in ahead of consensus economist expectations of 1.6% growth. Manufacturing was the key sector here – after contracting by 0.3% in 2Q18, manufacturing output jumped 7.5% in 3Q18. Headline consumer price inflation (CPI) slowed to 5.2% YoY in November vs October’s 5.1% print, while MoM inflation decelerated to 0.2% in November vs October’s 0.5% print. SA also recorded a trade surplus of R3.49bn in November vs a downwardly revised R4.29bn deficit in the prior month.

In politics, early December saw President Cyril Ramaphosa announcing the appointment of Advocate Shamila Batohi as the new National Director for Public Prosecutions (NDPP) heading the National Prosecuting Authority (NPA). The NPA has in recent years been accused of failing to act against the rampant crime and corruption in SA. Meanwhile, shocking testimony at the Zondo commission of enquiry into State Capture continued to show the depths to which government criminality and lack of accountability during Zuma’s tenure had fallen.

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