The JSE struggled in September (FTSE/JSE Capped All Share -5.8%) as it dipped back into negative territory YTD (-3.1%). The returns of the precious metal miners were again the biggest driver of index performance. Gold (-15%) and platinum miners (-7%) cost the index more than 3% in September as precious metal prices fell (gold -6% MoM, platinum -5% MoM). Investment conglomerates Naspers and Prosus were another source of pain for the JSE (-12% and -8% MoM, respectively), costing the local bourse 1% of performance for the month and bringing their YTD contribution to the JSE’s performance to -4%. Tencent, their largest underlying investment, was down 5% in September and has shed more than a quarter of its value YTD as foreign investors have soured on Chinese companies.
Stocks geared to the domestic economy did not fare much better (-3.3% MoM), with bright spots few and far between. Amongst the financials, only insurers Discovery (+1.6% MoM) and Old Mutual (+3% MoM) ended the month in positive territory. The general retailers were another rare bright spot (+5% MoM). Amongst the general retailers, it was more of the same for Shoprite (+6% MoM) and Boxer (+3.6% MoM), with the pair now 22% and 15% higher YTD, respectively. For the others (Clicks +5%, Spar +8%), September brought some welcome relief to what has otherwise been a tough year.
The South African Reserve Bank’s (SARB) late September interest rate announcement followed the release of marginally better-than-expected inflation data (+4.4% YoY), albeit data based on the August period that preceded September’s 14% rise in the oil price. The SARB delivered a 0.25% hike in interest rates (as largely expected), taking the prime lending rate to 10.75%. The SARB’s rate hike followed hikes earlier in the month by global central banking peers in the US and Europe as central bankers try to fight inflationary pressures from higher oil prices.
The rand fell 1.9% against a generally stronger US dollar, ending the month at R16.42/US$1, marginally stronger than the level it started the year at (R16.56/US$1). The South African (SA) government’s 10-year borrowing rate climbed 0.25% during September to end the month at 9% p.a. as it followed a trend of rising borrowing rates globally.
