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August local commentary: The JSE follows world markets lower

The South African (SA) stock market followed a similar path to global markets in August – benefitting from strong investor sentiment to rally 5% into mid-month before a series of hawkish statements from US Federal Reserve (Fed) members soured global investor sentiment and the JSE fell alongside global markets into month-end. This left the SA stock market down for August (FTSE/JSE Capped SWIX -1.3% MoM).

Massmart was August’s star performer (+57% MoM) off the back of an announcement that Walmart is looking to buy up the remaining shares it does not already own, while food retailers Spar and Pick n Pay ended the month with double-digit share price gains. Coal exporter, Thungela (+13% MoM), was another double-digit performer in August, leaving it up 306% YTD. Still, most of the other miners struggled, particularly the gold (-9% MoM) and platinum (-3.5% MoM) miners, as the prospect of weaker global economic activity weighed on metal prices.

Bidcorp (+6% MoM) delivered strong results despite headwinds related to supply-chain disruptions, labour shortages and input cost inflation. Investment companies Naspers and Prosus held up relatively well (+3% and -1.3% MoM, respectively) though they underperformed their core investment, Chinese conglomerate Tencent (+10% MoM in rand terms).

Stats SA released some key economic data during the month, with July inflation (+7.8% YoY) printing slightly above the June level (+7.4% YoY) but in line with expectations, while 2Q22 unemployment data (+33.9%) came in lower than expected and below the 1Q22 print (34.5%), albeit still unacceptably high. Core inflation came in slightly ahead of expectations (+4.6% YoY) but still comfortably within the South African Reserve Bank’s target range of 3% to 6% and only marginally up from June (+4.5% YoY).

South African 10-year government bond yields ended the month marginally higher (10.9%), having come into the month already elevated (10.8%), with the local bond sell-off significantly less severe than the 0.6% spike in US 10-year government yields. The local currency struggled against a strong US dollar ending the month 2.9% weaker, featuring amongst the worst-performing currencies in August.



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WEBINAR | The Navigator – Anchor’s Strategy and Asset Allocation, 2Q24

Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.