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September Local Commentary: The JSE declines for a second consecutive month

The South African (SA) stock market followed global equity markets lower (FTSE/JSE Capped SWIX Index -2.9% MoM) for a second consecutive month, wiping out all the YTD gains (-0.2% YTD). Losses on the JSE were fairly broad-based, though mining stocks (which were the biggest drag on the JSE’s August performance) managed to deliver a small positive contribution for September as industrial metal prices held up well despite continuing concerns over Chinese economic activity (iron ore +1.7% in US dollar terms). Soaring energy prices (Brent crude oil and coal both +10% MoM) were a tailwind for Sasol (+11% MoM) and coal miner Thungela (+23% MoM). Gold miners were the biggest disappointment amongst the mining cohort as rising rates put pressure on the gold price (-5% MoM) and drove the JSE-listed gold miners down 10% MoM.

The local currency held up relatively well (-0.2% MoM) against a generally strong US dollar as rising global rates and general risk aversion saw investors flock to the safety of the US dollar in September. Local government bond yields sold off in sympathy with global rates on concerns that global central banks may need to keep rates elevated for longer. South African 10-year government bond yields rose alongside US 10-year government bond yields, leaving them c. 0.6% higher for the month at 12.4%, about as high as they have been in two decades.

A few company-specific stories managed to defy the general September gloom. Spar’s announcement that it plans to exit its loss-making Polish operations helped lift its share price by 13% MoM. Sun International was another JSE-listed counter to experience a 13% MoM share price rally following the release of its 1H23 results, which included a 12% YoY jump in revenue. At the other end of the spectrum, Transaction Capital saw its share price continue to melt away, down 35% MoM (having seen 87% of its market cap disappear YTD) after it announced the departure of CEO David Hurwitz, as the company continues its efforts to restructure its SA Taxi business.

SA inflation has been drifting lower for the past few months, edging towards the mid-point of the South African Reserve Bank’s (SARB’s) target range. Still, the most recent data for August saw both the core and headline inflation levels tick 0.1% higher to 4.8% YoY, though the SARB maintained the repo rate at 8.25% at its September meeting.



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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.