Momentum on the JSE continued into January (FTSE/JSE Capped All Share +3.8% MoM) with the South African (SA) bourse extending a run that has seen it rally 70% over the past 2 years. The JSE performance continues to be dominated by precious metal miners, which contributed 3.5% to the bourse’s January gains. Gold miners (+12% MoM) and platinum miners (+15% MoM) benefitted from further price appreciation in precious metal prices (gold +13% MoM, platinum +7% MoM). However, a 4% one-day drop on the last trading day of the month (30 January) prevented the JSE from delivering an even more spectacular start to the year. A 9% fall in the gold price and a 17% drop in the platinum price on 30 January drove the majority of the JSE’s month-end wobble.
Outside of the miners, there were strong performances from asset manager Ninety-One (+17% MoM), which reported year-end assets under management (AUM) of GBP159.8bn (+5% QoQ) and banks (Investec +8% MoM, ABSA +6% MoM and Capitec +5% MoM). Among the biggest laggards was Richemont (-15% MoM). The luxury goods company delivered a largely positive trading update during the month, with organic sales in its key jewellery division up 14% YoY. Despite this, the share price struggled as investors focused on the potential impact on margins from surging precious metal prices and potential US tariffs related to the tensions between the US and Europe over Greenland’s sovereignty. Investment conglomerates Naspers (-10% MoM) and Prosus (-9% MoM) were also a drag on JSE performance in January despite a decent month from their largest investment, Chinese tech conglomerate Tencent (+1.2% MoM).
The SA Reserve Bank (SARB) kept rates on hold at its January meeting despite some hope that muted inflation might allow it to loosen monetary policy. Two of the six Monetary Policy Committee (MPC) members voted in favour of a cut. The week before the SARB’s meeting, Stats SA released the country’s latest inflation data, which came in slightly below economist expectations, with core inflation (+3.3% YoY) only marginally above the SARB’s new 3% p.a. target. During January, the rand dipped below R16/US$1 for the first time in almost 4 years, before ending the month at R16.15/US$1, leaving it 2.6% stronger MoM against a weak US dollar. The SA government’s 10-year borrowing rate defied a generally softer global yield environment, ending the month 0.15% lower at 8.05% p.a., its lowest level in almost a decade.
