The South African (SA) stock market matched global equity markets in producing a third consecutive negative month in October (FTSE/JSE Capped SWIX Index -2.9% MoM), dragging the bourse further into negative territory for 2023 (-3.2% YTD). Losses were again fairly broad-based, though, with the gold miners (+21% MoM) bucking the trend as they followed the gold price higher in October (+7% MoM). The impact of geopolitical risk seemingly outweighed the headwind typically posed to the precious metal price by higher rates.
Outside of the gold miners, there were a few positive contributions at an individual company level, including Tiger Brands (+12% MoM), which bounced off depressed levels as the announcement of new management brought the prospect of a turnaround in fortunes and Clicks (+6% MoM) which announced surprisingly resilient FY23 earnings. At the other end of the spectrum, Pick n Pay (-32% MoM) reported a 1H24 loss and skipped the interim dividend, while MTN (-19% MoM) was weighed down by the announcement of another spurious demand for tax payment by the Nigerian authorities and significant weakness in the Nigerian currency.
SA’s latest inflation data showed headline inflation (+5.4% YoY) accelerated (in line with expectations) as rising food and energy prices continued to take their toll. In comparison, core inflation (excluding those volatile categories) slowed to 4.5% YoY, coming in below expectations (4.7% YoY). The US dollar has been strong for the past few months, buoyed by higher US rates and general risk aversion. However, the rand held up relatively well, finding itself amongst a small grouping of currencies to strengthen against the US dollar in October (+1.5% MoM). Still, the local unit remains towards the back of the queue in its 2023 performance against the greenback (-8.6% YTD) after a tough start to the year. The SA government’s long-term borrowing rate also defied the global trend in October, falling marginally to 12.3% p.a. in the face of generally higher global bond yields.