EB Market Update – December 2018
Global – Macro slowdown or recession?
Volatility in global markets epitomised the fourth quarter of 2018 as investors’ sentiments were tested with mixed data amidst increased geopolitical concerns surrounding the trade standoff between the US and China, weakening Chinese economy, and the possibility of a hard Brexit landing. October saw the sharpest one month decline since May 2012, with the MSCI World shedding -7.3% with Emerging Markets eclipsing the fall tabling at -8.7%.
November provided a brief respite and recovery, only for December to table a -7.6% fall as the US fell 9.0% – despite US jobs data exceeding 3% for the first time since April 2009. A key measure of US inflation picked up as expected in November on rising costs for housing, medical care and used cars, reinforcing expectations that the Federal Reserve would raise interest rates.
Local – Time to turn the leaf
The JSE All Share Index fell in line with global markets, tabling a -4.9% (ZAR) decline over the quarter with Industrials (-6.5%) and Resources (-5.0%) leading the overall index lower. Property was down -4.0% as Nepi Rockcastle came under selling pressure amidst another report by Viceroy Research claiming overstatement of profits.
The SA economy officially exited the recession after reporting 2.2% GDP growth for Q3. The rebound was in line with the expectations of economists who projected positive growth of between 0.8% and 2.5%. Economists polled by Reuters had predicted a 1.6% expansion. Stats SA announced that GDP growth for Q2 was revised from -0.7% to -0.4% after figures for the mining and manufacturing industries were revised upward. Data on agriculture and construction were revised downwards.
