Equity markets around the world sold off sharply, as the Iranian war escalated. Brent crude prices skyrocketed after the Straight of Hormuz closed, threatening energy accessibility around the world and reviving inflation concerns. The dollar strengthened, defending its title as the go-to safe-haven asset in a high-geopolitical risk environment. Gold retreated as a result. Emerging markets, especially commodity-based economies saw significant outflows, as investors mercilessly retreated.
South African equities underperformed their emerging market peers, as March’s turmoil was particularly severe locally. Resources dragged the bourse down, the withdraw from gold and platinum left SA’s main equity driver for the past year very exposed. SA bonds came under pressure as yields rose, but even ILBs sold off in the volatile and uncertain environment.
- The JSE All Share ended its winning streak, losing 10.5% over the month.
- Resources (down 15.2%) plummeted, and Financials (down 9.6%) tumbled, as Industrials (down 5.2%) managed to outperform the other sectors in the drawdown.
- Small-caps (down 8.2%) dropped, Mid-caps (down 11.7%) fell, and Large-caps (down 10.9%) trended lower in market conditions without reprieve.
- South African property markets didn’t fare any better, as the ALPI lost 11.7%, and the S&P SA REIT Index nosedived 13.6%.
- SA Nominal Bonds (down 6.8%) had a shocking month, and Inflation-Linked Bonds (down 5.9%) dipped lower.
- Developed market equities weren’t safe from the global risk off sentiment, as the MSCI World Index (down 6.3% in USD) ended far in the red. Emerging market equities, underperformed their developed peers, as the MSCI Emerging Market Index (down 13.0% in USD) closed significantly lower.
- The Rand weakened against major currencies, ending an almost year-long rally. Relative to the US Dollar (Rand depreciated 7.5%), the Euro (Rand depreciated 4.9%) and the Pound Sterling (Rand depreciated 5.5%).
- Resources were mostly correlated to the rest of the markets, as Gold (down 11.1%), and Platinum (down 17.6%) lost double-digit returns. Brent Crude however added 63.3%, as the Iranian war escalated throughout March.
Source: Factset
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