April local commentary
The JSE had a strong month in April (FTSE/JSE Capped SWIX Index +3.4% MoM), leaving it amongst the best-performing emerging market (EM) bourses YTD (+6%), although the currency headwind (-2.7% MoM and -6.9% YTD) pushes it to the bottom of the list YTD when measured in US dollar terms. Around 35% of the JSE’s April performance came from the gold miners (+17% MoM), making this grouping the best-performing industry on the JSE for the second consecutive month (+41% MoM in March) despite an April gold price rally of only 1.1% MoM (in US dollar terms). Platinum miners (+12% MoM) were also buoyed by metal prices (platinum +8% MoM), while the star performer in the sector was Northam (+24% MoM) as it announced its withdrawal from the bidding war for Royal Bafokeng Platinum (RBPlat). Diversified miners followed industrial metal prices lower in April (BHP -5% MoM, Anglo American -4% MoM). Investment conglomerates Naspers and Prosus weighed on the JSE’s performance (-1% MoM in aggregate), despite outperforming their largest investment, Chinese tech conglomerate Tencent (-8% MoM in rand terms).
Despite continued signs of domestic economic strain (SA retail sales fell for the third consecutive month, and local inflation ticked higher – headline CPI +7.1% YoY in March), JSE-listed corporates geared towards the domestic economy fared well in April (+2.4% MoM). Some of the best-performing, domestically oriented shares were also amongst the largest (FirstRand and Sanlam both +7% MoM). Shares with predominantly non-SA earnings benefited from the tailwind of a weaker local currency, with British American Tobacco (+7% MoM) and Richemont (+6% MoM) amongst the best-performing counters in this category in April.
South African 10-year government bond yields drifted higher in April, ending the month at 11.4%, the highest level since late 2022 when the prospect of impeachment of President Cyril Ramaphosa (over the events surrounding the theft of foreign currency from his Phala Phala game farm) rattled foreign investors. The drift higher in local bond yields came despite a generally benign environment for global bond yields in April.
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