Economic Report

These reports take a look at highlights in the local and global markets over the preceding month.

Economic Report: Review of April 2024

In April, South African asset classes witnessed strong performance overall. Local equities, represented by the FTSE/JSE All Share Index, gained 2.95% for the month, driven primarily by Industrials (+6.78%), fuelled by notable gains in "SA Inc" stocks like SA Financials and SA Retailers. However, SA Industrials (+1.58%) lagged, as most rand hedges struggled amidst a stronger rand and global market volatility. Resources maintained their momentum (+6.40%), mainly due to a significant share price surge in Anglo American PLC (+32.6%). Financials also posted gains (+2.95%), supported by leading banking counters such as Capitec (+11.1%) and FirstRand Ltd (+5.6%). Conversely, SA property experienced a decline (-0.48%) following a strong start to the year. Meanwhile, SA bonds (FTSE/JSE All Bond Index) rose 1.37%, driven by reduced election risk concerns and the prospect of a more stable post-election governing coalition. Global equity markets saw mixed returns, with developed markets trailing emerging markets. Developed markets saw a halt to their five-month streak of strong returns, marked by widespread sell-off. Factors such as persistent inflation, revised interest rate expectations, and weaker-than-anticipated economic growth dampened investor sentiment toward risk assets. Quarterly earnings updates further contributed to volatility in developed market returns. Japan notably underperformed due to concerns over the yen's historical lows against the US dollar. Global bonds were also affected by the sell-off, with yields rising. Conversely, emerging markets benefited from China's strong performance, which led to a sentiment shift and propelled emerging markets higher in April.

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Economic Report: Review of March 2024

In March, South African asset classes saw mixed performance. Local equities, represented by the FTSE/JSE All Share Index, were up 3.23%, led by strong returns from Resources (+12.80%). SA Industrials (+2.64%) fared well, but SA Retailers struggled, dragging Industrials (-0.60%) down. Financials (-3.36%) were negatively impacted by weakness in banking and insurance. SA property (-0.58%) retreated after a strong start, and SA bonds (FTSE/JSE All Bond Index) fell by 1.93%, reflecting concerns over South Africa’s fiscal position amid an election year. Global equity markets sustained their momentum in March, defying concerns over persistent inflation and postponed rate cuts. Central banks, cautious amid inflationary pressures, postponed rate cut projections for later in 2024. Despite this, optimism towards risk assets prevailed, driving most markets into positive territory. Both emerging and developed markets experienced gains. Major central banks, such as the ECB, US Fed, and Bank of England, left interest rates unchanged, aligning with market forecasts.

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Economic Report: Review of February 2024

In February, South African (SA) asset classes underperformed their global emerging market counterparts, with local equities delivering negative returns for the second consecutive month. The FTSE/JSE All Share Index declined by 2.44%, driven primarily by a 6.92% drop in the Resources sector, attributed to weak performance in energy, diversified miners, and platinum holdings. Financials declined by 1.20% due to weakness in banking counters, while Industrials decreased by 0.79% due to poor returns from SA retailers. SA Industrials, though negative at 0.74%, exhibited more resilience, benefiting from a weaker rand and positive global sentiment. SA property, the best-performing local asset class, experienced negative returns, with the SA All Property Index declining by 0.34% for the month. SA bonds, represented by the FTSE/JSE All Bond Index, moved lower by 0.58%, yielding negative returns in a challenging environment. Global equity markets had a positive month, driven by the US's 4th consecutive month of strong performance, reaching all-time highs on expectations of the Federal Reserve having completed its rate hiking cycle. Japan exceeded its 1980s peak, while the UK faced economic challenges, entering a technical recession, resulting in lagging performance. China's robust performance bolstered the returns of emerging markets amid expectations of further stimulus. Developed market central banks, including the Bank of England, maintained interest rates in January, emphasising the need for evidence of controlled inflation before considering cuts. Bond markets showed subdued performance due to diminishing optimism about the pace of US Federal Reserve rate cuts, leading to higher yields supported by a robust US labour market.

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Economic Report: Review of January 2024

In January, South African (SA) asset classes followed global emerging market peers lower, as local equities produced weak returns. The FTSE/JSE All Share Index declined by 2.93%, primarily due to a downturn in the commodity sector. SA property counters stood out, starting the year strong with the SA All Property Index advancing 4.42%. SA bonds, represented by the FTSE/JSE All Bond Index (+0.71%), moved higher alongside cash returns as the yield curve steepened. In sector-specific performance, Resources (-6.31%) led the decline, impacted by poor showings in energy and platinum holdings due to weakened commodity prices. Domestically focused companies were a drag on the local bourse, with Industrials declining by 4.32%. Financials (-3.17%) also contributed to negative returns, with major banks such as Firstrand (-7.6%), Standard Bank (-4.0%), and Capitec (-1.4%) showing weakness. SA Industrials (-1.22%), housing rand-hedge companies, incurred milder losses, benefiting from a partially weakened rand. Global equity markets exhibited volatility and varied performances. Strong returns were evident in Japan, the United States, and certain European regions, whereas emerging markets faced relative challenges. In the US, markets displayed robust returns initially but weakened towards the end of the month as the Federal Reserve resisted an interest rate cut in March. Japan's Nikkei recorded its best January return in 25 years. Conversely, emerging markets encountered difficulties attributed to a robust US dollar and negative sentiments surrounding China due to real estate concerns, deflationary pressures, and uncertainties about US interest rates. Most developed market central banks, including the US Fed, maintained unchanged interest rates, underscoring the importance of evidence of controlled inflation before considering rate cuts. Global bonds experienced a decline as yields ticked higher.

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Economic Report: Review of December 2023

In December, South African (SA) asset classes, including equities, property, and bonds, showed strong returns, following global trends. Property counters performed exceptionally well, outpacing other local assets, driven by the belief that the interest rate cycle has peaked. Although local equities had positive returns, they lagged the broader emerging market peers. SA bonds continued their robust performance, influenced by a re-evaluation of rate cut expectations by major central banks, especially the Federal Reserve. In sector performance, Industrials led with a gain of 6.94%, followed by Financials at 5.27%, driven by strong performance in domestically geared shares, particularly in banks and insurers. SA Industrials gained 0.71%, but Naspers and Prosus were negatively impacted by the performance of their major investment, Tencent. Resources were slightly down at -0.03%, with platinum miners performing well, while gold miners and Sasol faced challenges due to falling Brent crude prices. Global equity markets sustained their rally, even amid persistent geopolitical tension in the Middle East, as market sentiment improved due to optimism regarding potential US rate cuts in 2024. In its final meeting for 2023, the US Federal Reserve chose to keep rates unchanged and indicated the conclusion of its rate-hiking cycle, with US rates currently at a 22-year high. However, emerging markets faced challenges, primarily due to Chinese stocks struggling in December. Chinese regulators announced another unforeseen intervention, this time targeting online gaming, impacting the performance of Chinese stocks.

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Economic Report: Review of November 2023

In November, South African equity markets surged alongside global counterparts, with the FTSE JSE All Share Index rising 8.55%. All sectors contributed to robust returns, with SA industrials leading at +10.10%, driven by Naspers (+19.4%) and Prosus (+19.7%) on strong results, while industrials gained 2.56% for the month. Financials (+8.32%) performed well, boosted by Capitec (+18.5%) and Investec (+18.4%). Resources (+6.40%) saw solid gains, particularly in gold mining stocks like Harmony (+35.4%) and Gold Fields (+14.6%). SA Listed Property rebounded by 9.04%, with Nepi Rockcastle (+15.2%) contributing significantly. Local bonds, represented by the FTSE JSE All Bond Index, increased 4.73% as bond yields eased amid a risk-on environment favouring emerging market assets. Global markets rebounded in November, reversing losses from the previous three months due to signs of economic moderation in the US and declining inflation in developed markets. Positive data releases supported the belief that central banks have reached the peak of their tightening cycles, benefiting both equities and fixed income. However, Chinese equities posed challenges for emerging markets, as China entered December with year-to-date benchmarks still lower for both domestic and foreign-listed companies. Ongoing issues in China's real estate sector, impacting consumer sentiment, and investigations into companies like Zhongzhi Enterprise Group further contributed to market dynamics.

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Economic Report: Review of October 2023

In October, the South African equity market mirrored global trends, experiencing a 3.44% decline in the FTSE/JSE All Share index. SA industrials (-4.51%) led the decline, with MTN (-19.4%) affecting the index. Industrials (-3.56%) followed, influenced by a stronger rand and global market weakness. Weak platinum and diversified miners impacted resources (-3.17%). Financials fell by 1.99%, outperforming the broader market. SA Listed Property declined by 3.33%, driven by risk-off sentiment and drops in Nepi Rockcastle (-2.8%) and Growthpoint (-1.4%). Local bonds, represented by the FTSE/JSE All Bond Index, rose 1.71% as bond yields eased. Global equity markets extended their decline for the third consecutive month, influenced by higher US interest rate expectations, driven by robust September retail sales and strong Q3 2023 GDP growth. Negative sentiment persisted due to geopolitical tensions in the Middle East and heightened US-China tensions, mainly due to advanced chip restrictions. This risk-off environment impacted US bonds, with yields rising for the sixth consecutive month, causing prices to fall.

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Economic Report: Review of September 2023

In September, the South African equity market followed the global downward trend for the second consecutive month, with the FTSE/JSE All Share index falling by 2.55%. SA Industrials were the biggest losers, dropping 4.12%, followed by Financials, down 3.74%, mainly due to FirstRand's 13.0% decline. Resources were the top performers, rising 1.21%, supported by mining stocks. SA Listed Property underperformed with a 3.76% decline, primarily due to a significant drop in Growthpoint's value. Local bonds, represented by the FTSE/JSE All Bond Index, saw a 2.34% decline as expectations for higher interest rates led to a shift in the yield curve and lower bond prices. Global equity markets declined for the second consecutive month due to central banks' cautious statements, high equity valuations, and signs of slowing economic growth. Falling inflation led to central banks keeping interest rates unchanged, but there were concerns about lingering inflation risks, increasing the likelihood of an extended period of higher interest rates. This uncertainty prompted a widespread sell-off in various assets, including the US 10-year government bond, reaching a 17-year yield high.

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Economic Report: Review of August 2023

In August, the South African equity market mirrored global trends, with the FTSE/JSE All Share index falling by 4.77%. Weakness in the Resources sector (-8.38%) was mainly due to poor performances in gold and platinum group metals. SA Industrials (-5.05%) suffered from Naspers and Prosus, linked to Tencent's performance. Financials managed a modest -1.59%, weighed down by Capitec's -11.6% decline, while Industrials gained 2.35%. SA listed property rose 0.83%, led by Nepi Rockcastle (+5.8%). Local bonds, driven by the FTSE/JSE All Bond Index, saw a slight decline of 0.23%, as sentiment towards SA assets, a weaker currency, and fiscal concerns pressured the yield curve. In August, global equity markets faced headwinds as sentiment soured due to expectations of prolonged high-interest rates to combat inflation, supported by robust economic data. Concerns about China's economy, the second largest globally, added to worries about global economic health. Emerging markets, including China, struggled more than developed markets due to weaknesses in Chinese assets, impacting the broader emerging market landscape.

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Economic Report: Review of July 2023

In July, the local equity market rallied alongside global peers, as evidenced by the 4.01% gain in the FTSE/JSE All Share index, driven by positive returns across all sectors. Notably, the financial sector surged by 7.84%, fuelled by strong performances from major players such as Capitec (+14.4%) and ABSA (+12.8%), while the industrials sector also posted robust growth of 5.62%. However, the SA industrials segment fell behind at 2.58%, attributed to currency-exposed holdings impacted by the strengthening rand. The resources sector displayed resilience with a 3.16% uptick, propelled by rebounding prices of precious and platinum group metals. SA-listed property gained 2.46%, in line with other South African asset classes. Furthermore, local bonds continued their upward trajectory, rising by 2.32%, extending the positive trend from June. Recession fears transformed into a cautiously optimistic outlook, with expectations of a "soft landing" for economies and reduced recession risks. This sentiment drove the rise of riskier assets, while global bonds faced challenges in generating positive returns. Conversely, China's post-COVID economic recovery slowed, with Q2 2023 witnessing a 6.3% year-on-year expansion, falling short of the anticipated 7.3%. China exercised caution in implementing extensive stimulus measures due to concerns about rising local government debt.

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Economic Report: Review of June 2023

In June, the local equity markets displayed positive performances, with the FTSE/JSE All Share index gaining 1.35% for the month. Sentiment towards South African-focused equity counters and asset classes improved slightly over the course of the month. Financials experienced a strong rebound (+11.66%) after a challenging May, while resources (-7.63%) faced significant pressure due to weaker commodity and gold prices. Both SA industrials and industrials recorded gains of 3.72% and 1.94%, respectively. SA listed property closed the month 0.95% higher, driven by a rebound in index heavyweights such as Resilient (+5.8%) and Redefine (+5.5%). Moreover, local bonds experienced a substantial rebound as yields fell, supported by improved sentiment stemming from reduced loadshedding and an improving economic outlook. Global markets rallied in June as various positive factors unfolded. The successful avoidance of a US government debt default and a pause in rate hikes by the US Federal Reserve (following ten consecutive increases) buoyed equity markets. Leading the charge in equity market returns were mega-cap, US-listed tech stocks, benefiting from the hype surrounding artificial intelligence. However, emerging markets (EM) struggled to keep pace with their developed market counterparts, with foreign-listed Chinese companies experiencing the most significant lag in performance due to a disappointing rebound in Chinese economic activity.

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Economic Report: Review of May 2023

In May, the FTSE/JSE All Share index experienced a decline of 3.92%, with all major sectors delivering negative returns for the month. The financial sector (-7.93%) was the biggest detractor, primarily due to the poor performance of prominent index components such as Capitec (-13.7%) and FirstRand (-6.4%). Resources managed to perform relatively better than other sectors albeit generating a negative return of -2.22%, with gold shares and rand hedges demonstrating resilience. SA industrials (-3.27%) and industrials (-0.81%) followed closely with their own declines. SA listed property experienced a decline of -5.41%. However, European-focused counters within the property sector outperformed, capitalising on the weakness of the rand. Additionally, local bonds concluded the month on a lower note as yields increased across the curve, resulting in lower prices. Global markets had a relatively lacklustre performance in the past month, as most equity markets experienced decline. However, the US equity market stood out as an exception, driven higher by the tech sector and witnessing substantial gains, particularly in mega-cap tech stocks. The lifting of the US debt ceiling posed concerns for market participants, but the conclusion of debt negotiations without major disruptions alleviated fears of a US default. Nevertheless, the lingering uncertainty surrounding this issue led to significant volatility across various risk assets throughout the month.

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Economic Report: Review of April 2023

In April, the FTSE/JSE All Share index experienced a positive growth of 3.38%. All major sectors performed well during the month, with the resource sector leading the gains at 3.98%. The surge in commodity prices boosted the performance of gold counters and platinum group metal (PGM) stocks. Following closely were the SA industrials (+3.06%), financials (+3.04%), and industrials (+1.36%). SA listed property also saw a significant increase of 5.79%. However, local bonds declined by 1.11% due to rising yields. On the global front, most markets ended April with positive results. The last week of the month was dominated by earnings reports from major US tech companies, which exceeded expectations. Despite this positive news, concerns regarding a potential US recession, the loss of over US$100bn in market value for US-listed Chinese shares due to geopolitical tensions between the two superpowers, fears of a US default, and reports of the Federal Deposit Insurance Corporation taking receivership of troubled US regional lender First Republic Bank, weighed on overall market sentiment.

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Economic Report: Review of March 2023

In March, the FTSE/JSE All Share index experienced a decline of 1.26%, mainly driven by the financial sector which fell 6.62% as banking counters faced volatility linked to the banking turmoil in the US. SA listed property also lagged, ending the month 3.92% lower, largely due to weak performances from index heavyweights, Growthpoint and Redefine. In contrast, local bonds gained 1.32% as yields came down in March. Global markets mostly increased in March, but the positive trend masked underlying volatility. Concerns about stress in the banking sector, including SVB, Signature Bank, and Credit Suisse, caused market participants to reassess central bank actions related to inflation and financial stability. Initially, safe havens rose due to fears of a broader financial sector fallout. However, towards the middle of the month, central banks reassured investors by expressing support for financial stability which boosted investor confidence, resulting in higher global markets and a repricing of future interest rate expectations.

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Economic Report: Review of February 2023

In February, the FTSE/JSE All Share index declined by 2.19%, retreating from the gains of the previous month. The resource sector saw the most significant losses, mainly due to poor performances of mining companies, which were weighed down by generally weaker commodity prices. The SA Listed Property index also retreated by a further 0.09% for the month, while SA bond prices came under pressure due to increasing yields with the FTSE/JSE All Bond index recording a decline of 0.87% for the month of February. Global equity markets experienced a decline from their year-to-date gains due to higher-than-anticipated US inflation data, which led market participants to become concerned about interest rates remaining elevated for an extended period instead of the previously expected pivot in 2023. Additionally, the recent rebound in Chinese equities came to an abrupt halt as concerns about government debt levels and long-term prospects for the local economy replaced the positive sentiment that was driven by the reopening.

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Economic Report: Review of January 2023

In January, local equities followed the upward trend of global stock markets as the FTSE/JSE All Share index rose by 8.89%, with the South African industrials and resources sectors leading the gains at 12.78% and 8.70%, respectively. Meanwhile, the South African listed property sector saw a decline of 0.79%. On the fixed income side, South African bonds had a positive month, gaining 2.94%. The global equity markets ended January on a positive note, driven by an improved market sentiment due to China's reopening after ending its zero-COVID policy in December and signs of easing inflation, as well as hopes that central banks may be near the peak of their interest rate hikes. Emerging markets outperformed developed markets for the third month in a row due to a surge in Chinese stocks.

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Economic Report: Review of December 2022

In the month of December, local equities followed global stock markets lower as the FTSE/JSE All Share index closed -2.26% with industrials (-6.11%) and financials (-5.70%) leading the losses. South African listed property, however, advanced for the third month in a row, returning 1.12%. On the fixed income side, SA bonds ended the month slightly higher, gaining 0.62%. Global markets ended the month of December lower driven by global central banks’ aggressive interest rate hikes to curb inflation, ongoing recession fears, Russia’s war on Ukraine and increasing concerns over a surge in COVID-19 cases in China - this was after the country’s decision to open its boarders, scrapping strict pandemic protocols.

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Economic Report: Review of November 2022

In the month of November, local equities experienced their best month in over two years as the FTSE/JSE All Share index gained 12.33%. All major sectors posted positive performances with resources (+16.02) leading the charge, followed by SA industrials (+14.04%) and financials (+4.88%). South African listed property advanced for the second month in a row, returning 5.86%. On the fixed income side, SA bonds ended the month higher, gaining 3.91%. Global markets continued to rally in November, as softer-than-expected CPI data from the US raised investor hopes that the Federal Reserve could ease the pace of monetary policy tightening. Emerging markets outperformed their developed market peers as Chinese stocks rallied on the back of constructive talks between President Xi Jinping and US President Joe Biden at the G20 Summit, an announcement of bailouts for China’s stressed property sector and initial signs that the Chinese government will start to ease strict COVID-19 lockdown restrictions.

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Economic Report: Review of October 2022

In the month of October, local equities ended the month higher as the FTSE/JSE All Share index gained 4.89%. All sectors posted positive performances with financials leading the pack. South African listed property broke its losing streak, ending the month 9.8% higher. On the fixed income side, SA bonds ended the month higher, faring better than their developed market peers. Global markets rebounded strongly in October, providing some reprieve to investors as most US stocks ended the month in positive territory on the back of an incrementally hawkish Fed and better-than-expected earnings. Emerging markets underperformed, led lower by a sharp decline in Chinese stocks.

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Economic Report: Review of September 2022

In the month of September, local equities tracked their global peers lower with the FTSE/JSE All Share index losing 4.13%, mainly driven by industrials. Resources held up relatively well as miners managed to grind out a positive return, benefitting from a rally in gold and platinum group metals. Global markets had a positive start to the month. However, the prospect of more aggressive monetary policy tightening trajectory soured investor sentiment. As such, global markets suffered their worst month, plunging back into bear market territory, as a worse-than-expected US inflation print triggered the US Federal Reserve’s 0.75% rate hike in September. This marked the third consecutive hike of that quantum. Emerging markets fared even worse than their developed market counterparts, mainly on the back of the underperformance from Chinese stocks.

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Economic Report: Review of August 2022

Local equities ended the month of August 1.84% lower, mainly driven by resources as the prospect of weaker global economic activity weighed on metal prices. Globally, markets started the month on a positive footing amidst investor optimism. However, investor sentiment turned negative towards the end of month due to concerns about the economic impact of a tighter US monetary policy. On the other hand, emerging markets held up significantly better on the back of strong performance from Chinese equities.

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Economic Report: Review of July 2022

Market sentiment improved in July with local equity markets following global peers higher and recouping some of the losses experienced in the first half of 2022. All major indices posted positive returns for the month. Miners rebounded nicely from the prior month slump despite continued pressure on commodity prices. Globally, developed markets ended the month in positive territory as investors began to focus on the prospect of interest rate cuts next year, given signs of a slowing global economy. However, emerging markets lagged amid weakness in China.

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Economic Report: Review of June 2022

In the month of June, local equity markets recorded their biggest decline since March 2020, tracking global peers. Miners were among the worst performers in June as commodity prices dropped on the back of slower global economic growth. Globally, it was yet another devastating month for the stock market. Rising interest rates, the continued lockdown in China and the ongoing war in Ukraine brought concerns of a possible global economic recession.

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Economic Report: Review of May 2022

In the month of May, local equity markets ended relatively flat, with resources, industrials, and SA industrials ending the month in negative territory. Financials outperformed as banks and insurance companies were amongst the best-performing stocks, rebounding handsomely from their poor performances in April. Globally, it was yet another tumultuous and volatile month as sentiment was weighed down by worries of a possible US recession that could emanate from rising interest rates, the ongoing Russian-Ukraine war, and soaring inflation. Rising oil prices and housing prices continue to be the biggest drivers of US inflation.

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Economic Report: Review of April 2022

In the month of April, local equity markets fell alongside global equity markets, with resources, SA industrials, and financials ending the month in negative territory. Miners, who have previously been a key driver of strong local market performance, were generally weaker in April. Production reports were disappointing amid weak iron ore prices as well as weaker gold and platinum group metal prices. Globally, a myriad of factors such as the continued Russian-Ukraine war, stringent COVID-19 lockdowns in China, and inflationary pressures weighed on sentiment, leaving investors and markets rattled.

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Economic Report: Review of March 2022

In the month of March, local equity markets ended flat as industrials had a tough month due to Prosus/Naspers ending weaker on the back of disappointing results from Tencent. After two months of strong performance, resources pulled back while financials rallied, benefiting handsomely from the strength of the rand. In attempt to curb inflation and stay ahead of the curve, the SARB increased the repo rate. Globally, the Ukraine-Russia crisis dominated headlines with sanctions and supply chain disruptions continuing to place upward pressure on energy and food prices. The eurozone inflation increased to an all-time high while US inflation also hit a staggering 7.9% causing US policymakers, for the first time since 2018, to increase the federal funds target range.

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Economic Report: Review of February 2022

After ending January on a rather subtle note, local equities advanced higher in the month of February, providing a hedge against the global turmoil that was sparked by tensions between Russia and Ukraine. Resources continued to extend their gains once more, underpinned by geopolitical tensions and uncertainty in Europe which drove commodity markets higher. Financials also extended their gains, buoyed by strong earnings from banks. On the global side, markets extended their losses as tensions between Russia and Ukraine intensified, leading to an outright invasion of Ukraine by Russia. Meanwhile, concerns over the speed and magnitude of interest rate hikes continued to weigh negatively on sentiment. Volatility made a comeback, unsettling growth and quality stocks the most while value stocks fell the least.

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Economic Report: Review of January 2022

After closing the year on a buoyant note, local equity markets ended January on a rather subtle note, pulling back from December’s rally albeit still managing to stay afloat. Resources stocks continued to be a positive contributor alongside financials while property retreated from last month’s gains to end the current month in negative territory. On the global side, markets took a toll as the rise in inflation and the prospects of tighter monetary policy spooked investors. Global sentiment also turned negative on the back of geopolitical tensions between Russia and Ukraine. The record high inflation also exerted pressure on the global bond market. In terms of investment style, value continued to outperform its growth and quality counterparts albeit in negative territory. Growth and momentum took the hardest hit following heightened inflation concerns which pushed yields higher and unsettled these parts of the market.

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Economic Report: Review of December 2021

In the month of December, local equity markets continued to extend their gains for the third straight month. While resources stocks continued its upward trajectory, financials however made a strong rebound to become the best performing sectors for the month, followed by listed property (which also extended gains from last month). On the global side, while labour and supply chain issues continued to exert upward pressure on inflation, fears over the Omicron variant faded as relatively less hospitalizations resulted from Omicron. Global sentiment, therefore, turned positive while the market also digested the commencement of a monetary policy tightening cycle. Developed market central banks have announced their plans to scale back on asset purchases. In terms of investment style, value outperformed its growth and quality counterparts.

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Economic Report: Review of November 2021

In the month of November, local equity markets extended their gains after the notable upside moves. Resources stocks continued to be the largest contributor to performance, also extending their gains from last month - the weakness in the rand remained supportive to large cap rand-hedge counters, while financials extended their sell-off. Interestingly, local property rebounded. On the economic front, the SARB’s monetary policy committee hiked interest rates, the first time since the emergence of COVID-19. On the global side, while labour and supply chain issues continue to cause inflationary pressures, the fourth wave of COVID-19 was the key driver of the dampened global market sentiment. Rising oil prices continue to weigh positively on the energy sector, albeit causing inflationary pressure on the other hand. Global equity markets were broadly lower, as investors found a safer haven in fixed income – this was one of the asset classes to offer relatively better performance, after US technology stocks.

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Economic Report: Review of October 2021

In the month of October, local equity markets staged a notable move to the upside, rebounding handsomely from the sell-off experienced in the previous two months. Resources stocks were the largest contributor to performance after their downturn in the last two months. The weakness in the rand was supportive to large cap rand-hedge counters, while financials and property edged lower. On the economic front, despite the IMF lowering its projections of global economic growth, it lifted SA’s economic growth projections. On the global side, inflation remains concerning factor in global markets, as labour and supply chain issues continue to cause inflationary pressures. This is despite the Fed’s firm position on the transitory nature of inflation. Rising oil prices also weighed positively on the energy sector. Despite bond yields touching a high of 1.7% during the month, global equity markets were broadly stronger, thanks to robust corporate earnings.

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Economic Report: Review of August 2021

Domestic equity markets retreated in August as sentiment for economic recovery eased slightly. Notably, South Africa launched the third phase of its vaccine rollout as the registration and vaccination for the 18-34 age group opened on 20 August 2021. According to the latest Department of Health data, approximately 12.6 million vaccines have been administered as of 31 August 2021. On the economic front, SA CPI made some notable moves to the downside. On the global side, equity markets recorded strong performances as the S&P 500 was up 2.9% for the month while the tech-heavy Nasdaq was up 4.0% in dollar terms. On the commodity front, Brent crude oil detracted by 4.4%, platinum was down 3.4% and gold was marginally down 0.03% for the month.

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Economic Report: Review of July 2021

Local In the month of July, local equity markets rebounded handsomely from losses of the previous month, thanks to strong recovery in the resources sector as commodity prices remain supportive. The rand continued to weaken with the social unrest being a contributor. On the economic front, social unrest that broke out in KwaZulu Natal and Gauteng took the spotlight and will have dampening ramifications for the country’s path to economic recovery. Global On the global side, the spread of the COVID-19 Delta variant unsettled cyclical areas of the market with bond yields retreating to levels last seen in February this year while the ECB tweaked its policy guidance on inflation. Talks of the Fed tapering off its bond purchases are starting to make their way into market sentiment. The Chinese regulatory crackdown of the private education and tech sectors led to a sharp sell-off in emerging market equities.

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Economic Report: Review of June 2021

During the month of June, local equity markets staged a notable move to the downside. This was as the resources rally continued to abate on the back of a fall in commodity prices, with the exception of oil. The weakness in the rand, following a four-month rally, dragged financials lower while property was the best-performing asset class. On the economic front, unemployment continued to deteriorate, reflecting the continued impact of COVID-19 and subsequent national lockdowns. GDP growth figures, on the other hand, came out positive for the first quarter of 2021. On the global side, inflation remains a key talking point, while the Federal Reserve (Fed) continues to deem it as transitory. Developed market sentiment was buoyed by President Biden’s spending proposal of $1.2 trillion, while value pockets of the market, which have been enjoying a rally, gave way to quality areas on the back of the hawkish policy tone of the Fed.

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Economic Report: Review of May 2021

Domestic equity markets extended their monthly gains in May as prospects of economic recovery continue to reflect positively on sentiment. Notably, South Africa launched phase two of its vaccine rollout with the aim of inoculating five million citizens aged 60 and over by the end of June. Thus far only approximately 1.3 million people have been vaccinated, although the vaccination drive does seem to have gained some traction. On the economic front, SA CPI made some notable moves to the upside. On the global side, equity markets were mixed as the S&P 500 was up 0.70% for the month whilst the tech-heavy Nasdaq lost 1.44%. On the commodity front, Brent crude oil rose by 3.3%, platinum was down 1.1% and gold was up 7.8% for May.

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Economic Report: Review of March 2021

Domestic equity markets extended their monthly gains in March. Prospects of economic recovery continue to weigh on sentiment with news of COVID-19 vaccine rollouts. Notably, South Africa has secured nine million doses of the Johnson & Johnson vaccine and 20 million doses of the Pfizer vaccine with the government’s intention to have 40 million South Africans vaccinated by the end of 2021. On the economic front, GDP growth for the fourth quarter made some notable moves to the upside, extending its growth from the previous quarter, supported by easing lockdown restrictions. Globally, equity markets remained robust with the S&P 500 and Nasdaq gaining 4.24% and 1.24%. A rise in US bond yields continues to weigh on sentiment as market participants fear that the $1.9 trillion stimulus package might cause the return of inflation in the long term. On the commodity front, Brent crude oil rose by 4% due to the Suez Canal blockage taking longer than expected to clear.

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Economic Report: Review of February 2021

Domestic equity markets extended their monthly gains in February as prospects of an economic recovery continue to weigh positively on sentiment. Higher commodity prices and a relatively lower oil price (albeit slowly making some upward moves) remain supportive to the SA economy. A relatively positive and upbeat budget also added positively to sentiment as national revenue surprised on the upside and efforts to contain the wage bill remained intact. On the global side, developed market equities made a slight recovery from their previous months’ lows with US small caps continuing to gain favour. The rotation from growth stocks to value stocks continued. US treasury yields spiked, triggering a move out of growth stocks, particularly in the US technology sector which is mostly viewed as overpriced. Yields have been rising as investors continue to price in expectations of higher inflation given the imminent fiscal injection.

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Economic Report: Review of January 2021

Local equity markets had a strong start to the year as optimism about a global economic recovery, the decreasing number of COVID-19 cases and vaccine rollouts across the globe boosted sentiment. The outlook for the local economy seems somewhat less gloomy as commodity prices and flows to emerging markets were supportive. However, fiscal risks continue to prevail on the back of unsustainable debt levels. On the global side, developed market equities had a tough start to the year as most developed market regions settled in negative territory. Investors seem to have rotated into US small caps. They delivered the strongest returns for the month, rallying 6.24% (in USD) while emerging market equities enjoyed decent gains of 2.97% (in USD).

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Economic Report: Review of December 2020

Local equity markets ended the last month of 2020 on a positive note, albeit retreating from the strong gains of the previous month. Resources and financials led the gains. Property continued to surprise on the upside, remaining the best-performing asset class for the second consecutive month. The rand, which had its strongest monthly move since May 2020, provided tailwinds for rand-hedge stocks. On the economic front, GDP growth for the third quarter made some notable moves to the upside, albeit from a low base, supported by easing lockdown restrictions. On the global side, equity markets remained robust as the US tech sector continued in strength. However, US small caps had their best months despite the backdrop of increasing COVID-19 cases globally. Emerging markets also turned in impressive performance as the dollar weakness remained supportive.

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Economic Report: Review of November 2020

Local It was truly risk-on for global markets in November, on the back of the positive COVID-19 vaccine news and hopes of the world returning to normality. The market was further supported by the announcement that Joe Biden had emerged victorious in the US election. Against this backdrop, local assets benefitted with equities, bonds, property and preference shares all experiencing a strong month Global November can be described as a turning point for global markets in the aftermath of COVID-19. During the month, three vaccines that are effective against the virus, were announced. This news boosted investor sentiment and increased optimism about the near-term economic outlook. As a result, global equity markets rallied strongly, led higher by technology stocks as seen in the performance of the Nasdaq, which advanced 11.80% in US dollar terms

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Economic Report: Review of October 2020

Local equity markets continued deeper into negative territory as the resource sector continued its downward trend alongside financials which took a downturn. On the economic front, the rise in business and manufacturing activity continued as a result of eased lockdown restriction. Globally, equity markets ended lower as concerns over the resurgence of COVID-19 cases spooked investors across major developed markets. In contrast, Chinese economic fundamentals are showing notable signs of recovery. In terms of investment styles, while growth stocks have had a multi-year rally, some signs of rotation to value stocks are beginning to show as high-flying tech stocks came under pressure in October.

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Economic Report: Review of September 2020

Local Local equity markets had yet another disappointing month. Large-cap, rand-hedge dominant stocks (i.e. Naspers, Anglo American and BHP Billiton) sold off notably, offsetting the in retail stocks’ rally that was bolstered by the easing of lockdown restrictions. On the economic front, interest rates were left unchanged as inflation risks remain muted given the recent currency strength and lower oil prices. Global On the global front, markets came under pressure alongside an unsupportive rand. The run-up to the US election dominated market news, together with protracted additional stimulus talks between the Democrats and Republicans. The Fed Chair reiterated his call for another fiscal response to aid the US economic recovery. The sell-off in US tech stocks contributed to the lag in US markets. Meanwhile, European markets tumbled as investors reacted to the resurgence in COVID-19 cases and ensuing tightening of lockdown restrictions.

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Economic Report: Review of August 2020

After four months of consecutive positive returns, local equities ended the month of August in negative territory. Gold mining, financials and property stocks took a nosedive while the rally in the consumer goods sector helped limit losses. Small caps, unlike mid- and large-cap stocks, delivered a positive return. The strength of the local currency was not supportive given the dominance of rand-hedges on the JSE. On the global front, US markets continued their rally, lifting global equities higher on the back of high-flying tech names. Facebook, Apple, Amazon, Netflix, Google, and Microsoft continued to dominate the market. However, short-lived rotations in and out US tech have become more prevalent given the lofty valuations in the US. There are encouraging signs that the US economy is beginning to recover as unemployment trends lower while economic activity in developed and emerging market countries is ticking up.

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Economic Report: Review of July 2020

Local Local equities ended the month of July higher, albeit much lower than the strong gains recorded in June. Gold mining stocks continued to be the leading gainers with the gold price rising to record levels. Global On the global front, emerging market equities continued to outperform developed market equities as the unprecedented global stimulus found its way to emerging market economies. While global equity markets (particularly the US) continue to be driven by sentiment (and a handful of technology stocks), economic fundamentals are not yet at pre-pandemic levels albeit showing modest signs of recovery.

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Economic Report: Review of June 2020

Local The risk-on environment continued in June with equity markets fast approaching their pre-COVID 19 levels. The equity rally was largely driven by the partial reopening of the domestic economy with manufacturing activity showing a welcomed improvement. The bleak fiscal picture painted by the Finance Minister (in his supplementary budget) was not sufficient to derail the market as local property led the gains followed by small-cap counters Global June proved to be another good month for risky assets, as global economies slowly started to reopen. Markets took comfort from the fact that governments and central banks appear to be working together to alleviate the impact of the Coronavirus-inspired recession and to support the economy. Emerging markets meaningfully outperformed developed markets, as the MSCI Emerging Markets Index rallied 6.96% in US dollar (5.82% in ZAR) and the MSCI World firmed 2.65% in US dollar (1.16% in ZAR)

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Economic Report: Review of April 2020

Markets staged a solid comeback in April, rebounding from the steep drawdowns of the previous month. The gradual easing of COVID-19 restrictions in many developed countries, preceded by aggressive stimulus measures from governments, helped propel the April rally. Global developed market equities were the main drivers of the rebound in local markets as the rand continued to weaken, albeit not as much as the blow-out seen in the previous month.

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Economic Report: Review of March 2020

The outbreak and spread of the coronavirus pandemic continued to take centre stage during March as the situation deteriorated with a growing number of confirmed cases and deaths. This was particularly pronounced in developed market economies (i.e. US and Europe).

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Economic Report: Review of February 2020

COVID-19 has taken centre stage in the political, economic, social and market landscape. Heightened anxiety over its impact on global growth and its possible catalytic effect to a global recession drove the risk-off sentiment seen in February. Investors are hunting for safe-haven assets amid uncertainty. COVID-19 has exerted a further strain on the economy, given the already-existing domestic fiscal woes. As a result, the rand experienced another sharp sell-off this month. Globally, the same COVID-19 sentiment reverberates as central banks engaged in emergency fiscal and monetary stimulus measures to curb the dire impact of the virus. This heightened uncertainty has dragged equity valuations to incredibly low levels as markets have officially entered bear territory.

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Economic Report: Review of January 2020

After a handsome rally in December 2019, local equities experienced “a fall from grace” as the sharp weakness of the rand was not enough to even lift the market into positive territory in January, except for a few rand-hedge market darlings such as Naspers and British American Tobacco. Domestic equities remain out of favour as local headwinds of policy uncertainty, slow pace of reforms and fiscal woes prevail. Investors are rather finding value in local bonds given the attractive levels of real yields. Globally, the outbreak of the coronavirus took centre stage, raising concerns over its impact on global growth. As a result, developed and emerging market equities recorded disappointing performances in base currency. However, the sharp depreciation of the rand bolstered global returns in rand terms.

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Economic Report: Review of December 2019

Domestic equities buoyantly staged a recovery in December as the resource sector lifted equity markets out of last month’s negative territory, characteristic of a “Santa Claus rally”. The SA economy recorded negative growth in the third quarter, reflective of the prevailing fiscal quagmire, exacerbated by the slow pace of reforms (particularly in state-owned institutions such as Eskom). The rand firmed up strongly over the month while inflation continues to taper down. Globally, positive sentiment continued to prevail as talks of the first phase of the deal between the US and China led to an agreement between the two powers. As a result, developed and emerging market equities recorded strong performance in their base currency. However, returns in rand terms were dampened due to the sharp firming of the rand.

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