South African (SA) equity markets fell for a second consecutive month (FTSE/JSE Capped SWIX Index -0.9% MoM), with the JSE weighed down by investment companies Naspers and Prosus (-2% MoM) and the miners (-7% MoM), while companies linked to the domestic economy (SA Inc. stocks) eked out a small positive return (+0.8% MoM). Amongst the miners, the precious metal miners were the worst-performing. Gold miners (-10% MoM) tracked the yellow metal lower (gold -4% MoM), while platinum group metal (PGM) miners (-12% MoM) were also dragged down by lower PGM prices. Palladium (-12% MoM) was the worst-performing PGM as prospects for sanctions on Russian palladium supply were perceived to be less likely under a Donald Trump presidency.
Recent JSE listing, WeBuyCars (+26% MoM), was one of the bourse’s star performers in November, boosted by surprisingly strong FY24 results with 40,000 vehicles sold in the three months to September 2024, helping to increase the company’s revenue by 16.5% YoY. Clothing retailers Pepkor (+17% MoM) and Mr Price (+13% MoM) were buoyed by strong earnings announcements and signs of a long-awaited pick-up in sales growth over recent weeks following their reporting periods. Troubled retailer Pick n Pay continued along its recapitalisation path, selling down a portion of its discount retailer, Boxer, into a heavily oversubscribed JSE listing towards the end of November. Boxer’s share price jumped 24% into month-end as investors clambered for shares in a JSE-listed company with strong growth prospects.
The SA Reserve Bank (SARB) mimicked its US counterpart’s 0.25% rate cut in early November, bringing the SA prime lending rate to 11.25%. The magnitude of the cut was anticipated, though still disappointing considering the continued benign local inflationary environment. SA inflation data (released the day before the latest SARB announcement) showed core inflation (+3.9% YoY) falling further below the midpoint of the SARB’s target inflation band (3%-6% YoY) while headline inflation (2.8% YoY) came in below expectations (3.0% YoY) reaching its lowest level since the peak of the COVID-19 pandemic in mid-2020.
The SA 10-year government borrowing rate followed global bond rates lower, retreating by 0.4% p.a. to 10.2% p.a. at the end of November. The rand struggled against a strong US dollar, falling 2.5% MoM as it found itself among the worst-performing major currencies in November. Nevertheless, despite this decline, the rand remains one of only two major currencies (the other being the Malaysian ringgit) to have outperformed a strong US dollar in 2024.
