South African (SA) equity markets followed global equity markets higher in May (FTSE/JSE Capped SWIX Index +3% MoM). Gold stocks have buoyed the performance of the local bourse YTD through April, but they were a minor detractor from May’s performance as the yellow metal price paused after a two-year, 70% rally. Chinese tech conglomerate Tencent (+5% MoM) boosted the return of domestic investment holding companies Naspers and Prosus (+6% MoM) as a de-escalation in China/US trade policy combined with a solid earnings announcement from Tencent during the month. Food producer, Tiger Brands (+20% MoM), was one of May’s standout performers as management continues to execute well on its turnaround plan. The maker of Albany bread’s 1H25 strong earnings announcement was accompanied by news of a special dividend from the results of management’s streamlining efforts. Investec (+10% MoM) delivered FY25 results with revenue ahead of expectations and above the top of its guided range. Pepkor (+9% Mom) was another JSE-listed company to report better-than-anticipated earnings in May. Results showed the company increased its lead as SA’s biggest seller of cell phones on a pay-as-you-go basis. Management suggested that the strong retail revenue growth momentum had extended into the 2H25.
Amongst the miners, Sasol (+27% MoM) saw its share price bounce off near-historic lows as it announced ambitious cost-cutting plans at its capital markets day. Platinum shares (+19% MoM) were another bright spot amongst the miners as the platinum price (+9% MoM) finally found some support, ostensibly from signs of jewellery demand out of China.
The rand (+3.3% MoM) was one of the best-performing major currencies against the US dollar in May as geopolitical sentiment improved on the back of the Government of National Unity’s (GNU) successful adoption of a budget at the third attempt. A much-anticipated visit by an eclectic SA delegation (including politicians, businessmen, and golfers) to the White House to meet with US President Donald Trump also ended with the path to a smoothing of bilateral tensions between the US and SA still intact.
SA bonds rallied in the wake of easing geopolitical tensions and returning global risk appetite, with SA’s 10-year government borrowing rate falling 0.5% to 10.1% during May. Domestic core inflation (+3% YoY) came in slightly below expectations, remaining around the bottom of the SA Reserve Bank’s (SARB) target range (3%-6% p.a.), paving the way for the SARB to cut rates by 0.25% at its May meeting. This is the fourth cut of the current rate-cutting cycle, dating back to September 2024, and brings SA’s prime lending rate to 10.75% p.a.
