The South African (SA) stock market ended the year on a positive note (FTSE/JSE Capped SWIX Index +2.9% MoM), capping a solid year (FTSE/JSE Capped SWIX Index +8% YTD), though in the context of rampant global markets (MSCI World +4.9% MoM and 24.4% YTD) it felt a little underwhelming. A major drag on the local bourse’s performance came via outsized exposure to the Chinese market, comfortably the most disappointing market for investors in December and 2023 overall.
Investment conglomerates Naspers and Prosus (-10% MoM in aggregate) were dragged lower by the performance of their largest investment, Chinese tech conglomerate Tencent (-13% MoM in rand terms). Tencent’s share price dropped as Chinese regulators announced their intention for further curbs on online gaming. Miners were up in aggregate (+2.9% MoM), with a strong performance from the platinum miners (+19% MoM) and a disappointing performance from the gold miners (-2% MoM) and Sasol (-12% MoM) as Brent crude fell 7% MoM. Diversified miners generally fared well on the back of stronger industrial metal prices (BHP +10% MoM). However, Anglo American bucked that trend (-7% MoM) after a disappointing trading update included details of plans for production and capex costs to offset lower commodity prices. Another big disappointment on the JSE was British American Tobacco (-8% MoM) – its pre-close trading statement included details of a large impairment to the value of its key US business and guidance for lower earnings growth for the medium term.
Shares geared to the domestic economy fared generally well, +6.2% MoM in aggregate and one of the best-performing parts of the local market in 2023 (+15% YTD), with the banks (+18% YTD) and insurers (+38% YTD) leading the way. Miners shaved 2% off the local bourse in 2023, with Sasol (-26% YTD) and the platinum miners (-41% YTD) the biggest areas of disappointment. The gold miners (+68% YTD) and miners geared to iron ore (BHP +27% YTD, Kumba 37% YTD) were the best places to be among the miners in 2023.
The SA government’s 10-year borrowing rate followed global interest rates lower, ending the month at 11.4% p.a., as low as it has been since May, though still above the 10.8% p.a. level at the start of the year. The SA All Bond Index (+1.5% MoM and +9.7% YTD) benefitted from the high yield and softening global rate environment to end the year slightly ahead of the local bourse for the first time since 2020. The rand strengthened against a weak US dollar in December (+2.7% MoM), though it still ended 7.2% lower against the greenback for 2023.
