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December local market commentary: JSE rises for second consecutive month

South African (SA) stocks did enough in December to push the local market into positive territory for 2020 (FTSE/JSE Capped SWIX Index +5.5 MoM and +0.7% for 2020). Most sectors contributed positively, the exception being the Naspers/Prosus complex, which were unable to overcome a strong currency headwind (the rand was up 5.3% MoM vs the US dollar) and negative sentiment around Chinese tech heavyweights (which came under scrutiny from Chinese anti-trust regulators). Still, despite a disappointing end to the year, Naspers and Prosus’ combined performance for 2020 resulted in a 37% gain, contributing 5.4% to the FTSE/JSE Capped SWIX Index performance for 2020.

Mining companies were up across the board, with platinum miners (+21% MoM and 47% higher for 2020) leading the way on the back of another strong performance from platinum group metals. Mining shares rose by 19% in aggregate for 2020, contributing 6% to the FTSE/JSE Capped SWIX Index. SA Inc. shares, sensitive to the domestic economy, also had a good month, particularly the local banks, which rose 8.8% MoM, although that was not nearly enough to put these counters into positive territory for the year as SA Inc. shares ended the year 16% weaker. It was hard to find a counter amongst that group which recorded gains for the year, with the exceptions being Discovery, Vodacom, Shoprite, and Multichoice (up 29%, 15%, 14% and 22%, respectively, for 2020).

Local property shares also had a strong end to 2020 (FTSE/JSE SA Listed Property Index +13.7% MoM), though like the other SA Inc. shares, this too was not nearly enough to turn a forgettable year positive as the index closed 2020 down 34% and it remains 50% below the peak reached at the end of 2017.

The SA rand’s strong rally into year-end capped a 30% claw back from its April lows against the US dollar, but nevertheless still saw it end the year 4.7% down. SA 10-year government bond yields also staged a strong fight back into year-end, with yields dropping 0.25% in December to close 2020 at 8.74% – also a remarkable recovery from the 12.38% yield seen in March. The strong recovery in local assets comes as the local economy is forecast to shrink by 8% for the year, but also comes in an environment where lacklustre inflation has allowed the SA Reserve Bank to provide plenty of monetary stimulus in the form of record-low interest rates, which ended 2020 at 3.5% as a result of 3% in cumulative rate cuts for the year.



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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.