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May 11, 2021

FTSE/JSE Capped SWIX – 1st Quarter March 2021

FTSE/JSE Capped SWIX The local equity market returned 12.6% over the quarter driven predominantly by the strong rally in Resources (+18.8%). Platinum Group Metals (PGMs) had a particularly strong March, due to a deeper deficit in Rhodium and Palladium. Continued strength in iron ore and copper boosted mines further. Industrials contributed 12.9% followed by financials with 2.3%. Listed property earned 6.4% over the quarter adding to its rebound off a very depressed base.

Global & Local Bonds – 1st Quarter March 2021

Global bonds Global monetary policy remained very accommodative over the quarter. The FED kept interest rates unchanged while revising their growth forecast for the US economy from 4.2% to 6.5% for 2021. This is projected to be accompanied by a lower unemployment rate which is estimated to come in at 4.5%. Local bonds Volatility in the bond market remained elevated as continued global stimulus and liquidity triggered inflationary concerns over the quarter. This was further exasperated by the re-opening of global economies which is projected to release significant pent-up demand. The local bond index fell 1.7% as longer-dated SA rates tracked higher global yields. The SARB kept interest rates unchanged given benign inflation while the model projected two 25 basis point hikes to come in 2021. While CPI remained at the lower end of the SARB’s target range, it is...
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The Rand – 1st Quarter March 2021

The rand was mostly flat over the quarter marginally weakening 1.14% amid vaccine optimism checked by inflationary concerns. This is after the rand experienced a strong gain in the previous quarter as seen by the sharp downturn in the blue line, in the graph below (exchange rate) bringing it close to its long-term trend as indicated by the orange line. Given the uncertain economic environment that South Africa finds itself in, it is likely that the currency exchange rate will remain volatile.

Global Markets – 1st Quarter March 2021

The IMF upgraded its global growth forecast to 5.5% for 2021, while its 2022 forecast remained unchanged at 4.2%. This move was hardly surprising given the continued stimulus provided by global central banks along with a strong vaccine drive over the quarter. As developed nations are vaccinating at a faster rate than emerging nations, we do expect their economic recovery to mirror this. Economies which are highly dependent on tourism will likely continue to struggle in the face of subdued international travel. Global equities rose on improved vaccine distribution and optimism around robust economic growth to come in 2021. This prompted a further rotation into cyclicals and value stocks. In dollar terms the MSCI world index delivered 4.9% outpacing the MSCI Emerging Market index at 2.3%

Market Update – March 2021

Market Commentary First Quarter 2021 The IMF upgraded its global growth forecast to 5.5% for 2021, while its 2022 forecast remained unchanged at 4.2%. This move was hardly surprising given the continued stimulus provided by global central banks along with a strong vaccine drive over the quarter. As developed nations are vaccinating at a faster rate than emerging nations, we do expect their economic recovery to mirror this. Economies which are highly dependent on tourism will likely continue to struggle in the face of subdued international travel. Locally, business confidence remained weak while consumer confidence increased on the back of stronger household finances. Read the full article