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October local market commentary: The JSE weighed down by global risk-off sentiment

The South African (SA) market had a third consecutive negative month in October (FTSE/JSE Capped SWIX -4.2% MoM) as the local bourse was not spared the global risk-off sentiment. However, the rand managed to buck that trend, ending the month 3.1% stronger against the US dollar at R16.24/US$1. The stronger rand was a contributing factor in a poor month for locally listed stocks with foreign earnings (rand hedges), which were down 11% in aggregate, and miners, which were down 10% in aggregate. Those counters combined to detract 4% from the FTSE/JSE Capped SWIX Index’s performance in October.

However, Naspers and Prosus were able to more than outperform the currency headwind and ended the month up 6.5% in aggregate, thanks to a strong month for their largest investment, Tencent, which was up 13% MoM in rand terms, and an announcement that Prosus would be buying more Naspers shares as part of a drive to unlock some of the holding company discount in those listings. Stocks with domestically geared earnings had a mixed month, with decent results driving some of the local retailers (Pick ’n Pay +9.1% MoM, Clicks +6.1% MoM). Capitec (+9.9% MoM) was the only local bank to end the month higher and the Insurance sector was a bit of a bloodbath (Discovery -16.4% MoM, MMI -16.1% and Old Mutual -9.5% MoM).

Finance Minister Tito Mboweni delivered the much-anticipated Medium-Term Budget Policy Statement (MTBPS) towards month-end and laid out a plan to curb spending on the government’s wage bill, avoiding the temptation to embark on a debt-fuelled spending spree. While encouraging, the plan has high execution risk as was very evident in the announcement of a R10.5bn bailout for failing state-owned airline, SAA which, along with other state-owned enterprises, has been a large drag on the fiscus.

SA 10-year government bond yields fell by 0.1% to end the month at 9.3% as the release of local inflation data for September showed core inflation (excluding food, beverages, petrol, and energy) was stable at 3.3%, comfortably towards the lower end of the SA Reserve Bank’s (SARB’s) 3%–6% target range.



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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.