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July local market commentary: Gold shares lead from the front

The South African (SA) stock market had a solid month in July (the FTSE/JSE All Share Index was up 3% MoM) although we note that, while it led global markets in June, it lagged its emerging market (EM) peers in July (MSCI EM +8.9% MoM). July’s stock market performance was all down to the materials sector, which was up 13% MoM with gold shares leading from the front once again (+24% MoM) off the back of a 9% rally in the rand gold price (which is now up 59% YTD). Gold shares have roughly doubled YTD, with platinum shares not far behind (+18% MoM). Companies with SA-centric earnings were largely flat and Naspers had a negative month (-0.5% MoM).

Those JSE-listed companies with predominantly foreign earnings also had a weak month, down 4% in aggregate as the rand strengthened by 1.5%, ending the month at R17.07/$1 after fading from a mid-month high of R16.40/$1. Anheuser Busch was the biggest exception amongst the foreign earners, up 10% MoM after posting 2Q20 sales of $10.3bn, ahead of expectations of $9.5bn. YTD, gold shares, Naspers and Prosus have contributed 10% to the performance of the FTSE/JSE Capped SWIX Index (which is down 8% YTD), while domestically focussed shares have cost the index 14%. SA-listed real estate’s rally in June did not last, as the sector experienced another negative month (-3.2% MoM), its fifth negative month YTD, leaving the local property index down 37% YTD.

SA core inflation for May and June were released during July, with core inflation hovering around 3% for both months, towards the bottom of the SA Reserve Bank’s (SARB) target range. This allowed the SARB to deliver a much-anticipated 0.25% rate cute at its July meeting. That was the SARB’s fifth interest rate cut for the year, having cut rates 3% to 3.5% YTD. SA’s 10-year government bond yield ended the month roughly where it started (9.7%) recovering from a brief sell-off above 10% during the month.



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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.