Shopping List (Local)

A reference guide to superior collective investment schemes in South Africa.

Local Shopping List - December 2023

Locally, rate hikes and a hawkish sentiment remained the theme as the South African Reserve Bank (SARB) hiked the repo rate by a larger-than-expected 50bps in May. Lesetja Kganyago, the SARB governor, emphasised that fighting inflation remains key, while also stating that interest rates may need to go higher and stay there for longer. Inflation has been slowing, however, falling to 6.3% year-on-year in May, from 6.8% in April, largely driven by declining energy prices. On the economic front, economic growth continued to be weighed down by loadshedding, which eroded consumer and business sentiment. South Africa’s manufacturing PMI fell to 49.2 points in May, indicating a contraction in activity, largely due to weak demand. Geopolitics also became a dominant theme in the quarter, with reports that South Africa was selling weapons to Russia, thereby bringing volatility in markets, prompting fears of sanctions from the West, and also weighing negatively on the rand. In addition, the rand was also negatively impacted by the government’s decision to grant diplomatic immunity to BRICS participants, including Russian President Vladimir Putin, with news later suggesting that President Putin would no longer physically attend the BRICS summit.

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Local Shopping List - June 2023

After expanding 1.8% in the third quarter of 2022 (well above the consensus estimate of 0.6%), the SA economy contracted by 1.3% in the fourth quarter of 2022. Growth was dragged lower mainly by finance, trade, mining, agriculture and manufacturing, among others. Loadshedding continued to weigh negatively on the country’s economic growth prospects with Eskom reintroducing Stage 6 loadshedding after breakdowns at several of power stations, exerting a strain on low diesel reserves. Troubles at Eskom intensified, however, when CEO André de Ruyter resigned in December. Economic growth continues to be constrained by loadshedding with elevated inflation, rising interest rates continuing to bode ill for consumer demand.

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Local Shopping List - October 2022

After a quarterly increase of 1.8% in the first quarter of 2022, the SA economy contracted by 0.7% in the second quarter, mainly driven by Eskom’s loadshedding, the floods in KwaZulu- Natal (KZN), labour uncertainty in some industries and slowing global growth. At an industry level, manufacturing was among the leading detractors (-5.9%) owing to KZN’s large exposure to this industry. On the upside, transport, storage, and communication were the leading contributors. Out of the 10 economic industries, seven were negative while only three were positive. The SA economy continues to face a combination of structural challenges relating to high unemployment and electricity constraints, and a dire fiscal position.

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Local-Shopping-List-Q421_Apr22

South Africa’s GDP advanced by 1.2% in the fourth quarter despite the emergence of the Omicron variant which proved to be less severe than previous variants. Five of the ten sectors experienced an increase in output with agriculture (+12.2%), trade (+2.9%), manufacturing (+2.8%), personal services (+2.7%) and transport & communications (+2.2%) being the key drivers to growth. Electricity, gas & water (-3.4%) and mining (-3.1%) were the leading detractors for the quarter, impacted mainly by Eskom’s electricity outages. The economic expansion follows a quarter of contraction and three consecutive quarters of growth in 2021, resulting in an annual growth of 4.9% in 2021.

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Local Shopping List - September 2021

South Africa’s GDP expanded by 1% in the first quarter of 2021, which translates to an annualised growth rate of 4.6%. This is modestly lower than the downwardly revised 1.4% growth recorded in the last quarter of 2020. Eight of the ten industries ended the quarter higher, while two industries lagged – electricity, gas & water (-2.6%) and agriculture (-3.2%). Mining (+18.1%), finance (+7.4%) and trade (+6.2%) were the biggest drivers of growth on the production side. Clothing & footwear was the highest at 22% on the expenditure side.

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Local Shopping List - April 2021

South Africa’s GDP rebounded by 13.5% in the third quarter of 2020 as COVID-19 lockdown restrictions eased, resulting in an annualised growth rate of 66.1%. All sectors experienced an increase in output with manufacturing (210.2%), trade, catering & accommodation (137%) and mining & quarrying (288.3%) being the biggest drivers of growth. Despite this rebound, industries have a long way to go before attaining pre-pandemic production levels. Overall, the economy has contracted 5.8% during the year.

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September 2020 - Review of Quarter 2

Year-to-date (30 June 2020) South African equities delivered mostly negative returns, with the broader index (JSE ALSI) down -3.16%, while offshore equities (MSCI World), aided by some currency depreciation were up 21% in ZAR. South African equities have subsequently continued to recover, but as a recent Funds on Friday article pointed out, the rally was mostly driven by SA corporates with globally diversified earnings.

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April 2020 - Review of Quarter 4

The last quarter of 2019 gave us some really strong performances across almost all assets classes. The JSE ALSI rallied 4.88% to end the year 10.52% up. Global markets (MSCI World) ended the year 24% higher than the year before. This came on the back of one of the longest bull-runs ever.

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