WM Market Update – November 2016
Global – Keynes thinking returns!
Political events continued to dominate global investment markets during the month with the surprise of the Brexit referendum being completely overshadowed by the shock election of Donald Trump as US President. The result saw a complete divergence in bond/equity performance in the US markets while the Dollar surged against most currencies and had a particularly negative impact on emerging markets. This was evidenced by the MSCI World Equity Index gaining 1.25% over the month in Dollar terms, while the MSCI Emerging Market Index declined -4.60%.
Domestic – Ratings escape?
The local market was dominated by the long awaited rating announcements by two of the internationally recognised rating agencies, Moody’s and Fitch. Moody’s elected to maintain SA’s rating at Baa2, while Fitch affirmed their rating at BBB- but changed their economic outlook from stable to negative. Standard and Poor’s rating is still awaited. Also dominant was the surprise election of Donald Trump as the next American president. Combined, these factors resulted in the FTSE/JSE ALSI declining -0.75% and in total return terms losing -0.55%. Resources were a positive factor with the RESI20 up 6.85%. The INDI 25 was down 4.14% while the bank and insurance FINI15 was up 1.34%. Gold Mining together with the Platinum and Precious Metals sectors were the big losers being down 16.9% and 15.0% respectively. Foreigners were net sellers of equities to the value of R21.59 billion.
