September was a tricky month to navigate for global investors. Although US indices finished comfortably higher in dollar terms, there were market jitters as investors feared that rate cuts had come too late. Poor employment data and a slowing economy saw markets stutter in the build-up to the Fed’s rate cut announcement mid-month. However, a surprise 50 basis point cut was cheered by the markets which rallied to record highs. Growth-on sentiment was the theme of the month, as China was injected with $114 billion worth of government support. This stimulus package pushed Chinese equities into a bull market and saw the biggest one-day gain since 2008.
South African asset classes reaped the rewards of global macroeconomic trends. The China equity rally bolstered local markets and saw resources and industrials skyrocket. The South African Reserve Bank cut interest rates, which sent bonds higher. However, because the local rate cut was smaller than the Fed’s, the Rand strengthened against major currencies. Local news added to the positive sentiment surrounding South Africa, as inflation eased for the third month and the end of September marked 188 days without loadshedding.
- The JSE All Share soared higher (up 4.0%) closing out an already successful quarter on a high note.
- The local bourse was supported by all three major sectors, as Financials (up 2.5%), Industrials (up 5.2%) and Resources (up 3.9%) all gained ground.
- Small-caps (up 4.0%), Mid-caps (up 5.1%), and Large-caps (up 3.7%) all advanced to higher levels
- The S&P SA REIT sector (up 5.5%) and the SA Listed Property sector (up 5.0%) continued to perform well and closed out the quarter as the best performing local asset class.
- SA Nominal Bonds (up 3.9%) saw large gains after the SARB cut interest rates, and Inflation-Linked Bonds (up 0.9%) inched higher as inflation slows.
- Developed Market Equities were left in the dust by their Emerging Market peers in U.S. Dollar terms, with the MSCI World Index up only 1.9% as the MSCI Emerging Market Index recorded massive gains, adding 6.7%.
- The Rand had another strong month, despite local rate cuts. Relative to the U.S. Dollar (Rand appreciated 2.9%), the Euro (Rand appreciated 2.1%) and the Pound Sterling (Rand appreciated 0.9%).
- Commodities were mostly positive in September. Gold (up 5.7%) and Platinum (up 5.5%) rallied hard, as Brent Crude (down 8.9%) dropped sharply.
Source: Factset
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