Eskom kept the lights on in April and helped ease the mood of South African investors, who drove the FTSE/JSE Capped SWIX Index up 5% for the month – its best performance in almost 2 years. Naspers was again a key contributor (+9.7% in April) dragged along by Tencent, which is now up 23.6% YTD. Banks and domestically focussed companies bounced back from a mediocre start to the year and a dismal March and were responsible for the bulk of the non-Naspers performance, with those companies gaining c. 8%, in aggregate, for April. Materials companies, which have done much of the heavy lifting YTD alongside Naspers, took a breather in April and were slightly down for the month, in aggregate. Amongst those Sasol was up 5.4% on the back of higher oil prices, however, the gold miners had a tough month as labour issues continued to put pressure on production.
Clicks and Pick n Pay were the only major domestic corporates to release results in April, both delivering earnings that exceeded expectations.
After a reprieve from ratings agency, Moody’s after markets closed at the end of March, the South Africa rand started the month strongly, gaining over 4% in the first half of the month, to nudge below R14/US$1. However, this was short lived and the currency retraced most of those gains into month-end, likely waiting for election results early in May before choosing a more sustainable trajectory. Bond yields followed a similar path, with the R186 government bond ending the month with its yield marginally lower at 8.5%.
Economic data released in April was mostly positive, with inflation coming in slightly below expectations (4.5% YoY) and retail sales (1.1% YoY), money supply (7.0% YoY) and private sector credit growth (6.1% YoY) all beating consensus expectations.