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February local market commentary: The JSE produces a fourth consecutive positive monthly return

South African (SA) Finance Minister Tito Mboweni, tabled the 2021/2022 National Budget in late-February, delivering a positive tone as a strong mining industry and a faster-than-expected recovery in spending resulted in corporate tax and VAT collections exceeding expectations by c. R 100bn. The higher revenue and progress on cost control allowed Mboweni to avoid raising taxes to pay for COVID-19 vaccines and forecasts for government’s peak indebtedness (projected for 2025-2026) were revised slightly lower (from 95.3% of GDP to 88.9% of GDP).

Having traded below 9% since the news of effective COVID-19 vaccinations broke in November, SA 10-year bond yields ended the month at 9.05%, climbing 0.3% in February as domestic bonds yields tracked US 10-year bond yields higher, with foreigners selling c. US$2.2bn of domestic bonds in the latter half of February. The local currency clawed its way back from a January sell-off against the US dollar (-3.1% MoM in January) and was marginally stronger for the year going into month-end, before the global spike in yields caused it to fall by 4.1% during the last few days of February, leaving the rand only marginally stronger for the month (+0.3% MoM).

Local stocks produced a fourth consecutive positive monthly return (FTSE/JSE Capped SWIX +5.3% MoM) having rallied 26% since the start of November 2020. There were decent contributions across the board, with gold miners being the only major segment that was down for the month (-16% MoM), with the gold price falling as rates climbed. Naspers and Prosus had a quiet month eking out small gains (1.1% and 0.6% MoM, respectively), despite a 3% MoM drop in the rand price of Tencent, their largest underlying investment. Platinum miners had a strong month (+19% MoM) as platinum group metals (PGMs) continued to surge and diversified miners (+14.5% MoM) benefited from a higher iron ore price. Sasol rallied 14.2% MoM (leaving it 40% higher YTD) after announcing it would avoid a dilutive rights issue. Amongst the domestically focussed sectors, banks and insurers were up 4% and 5% MoM, respectively, while the FTSE/JSE Listed Property Index rose by 8.6% MoM, having matched the local equity market’s 40% rally over the past four months.



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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.