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January Local Commentary: The JSE has a tough start to the year

South African (SA) stocks experienced a tough start to the year (FTSE/JSE Capped SWIX Index -2.9% MoM), following emerging market (EM) peers lower in January. Mining shares were one of the biggest detractors of the JSE’s January performance, down 7% in aggregate, dragged lower by weak commodity prices. Companies geared towards the domestic economy were another source of pain for the local bourse (-4% MoM in aggregate), with telcos MTN (-17% MoM) and Vodacom (-12% MoM) amongst the most disappointing, both casualties of currency devaluations impacting their African operations. The discretionary retailers were a rare bright spot amongst the domestically focussed companies. Mr Price (+9% MoM) stood out in that grouping, with its latest trading update surprising positively, with same-store sales up 8% YoY.

The rand-hedge component of the local bourse (companies with predominantly offshore earnings) was a rare bright spot (+3% MoM), helped at least partially by a weaker domestic currency. The rand was down 1.7% MoM against a strong US dollar. Luxury goods company Richemont was the standout performer amongst the rand hedges (+10% MoM). Shares in the luxury goods sector had been struggling in the six months leading up to the latest Richemont trading statement, and the strong share price reaction on a marginally better-than-expected trading update is perhaps a sign that sentiment around the sector had become overly negative, while operational momentum has remained robust. The listed property sector carried its strong momentum into 2024 (+4% MoM in January), starting the year off well after a multi-year period of disappointing returns.

The SA Reserve Bank (SARB) kept the country’s benchmark interest rate unchanged at its January meeting – the fourth consecutive meeting without a rate change. SA inflation data released in the runup to the SARB’s latest meeting showed that the country’s core inflation remained stable at the mid-point of the SARB’s target range (4.5% YoY). SA’s 10-year government bond yield ended the month unchanged (11.4% p.a.), following a similar path to global yields, which also spiked intra-month and then faded into month end.



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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.