MAR­KETS

Financial Mail - Investors Monthly - - Contents - Maarten Mit­tner

JSE bucks trend and ekes out a pos­i­tive year to date

The JSE all share came through rel­a­tively un­scathed in the quar­ter to end Septem­ber, which was the worst for eq­ui­ties in four years. The all share dropped 3,32% in the third quar­ter. In the sec­ond it lost 0,72%, but it gained 4,85% in a firmer first quar­ter.

By con­trast, the Dow Jones in­dus­trial av­er­age was 7,58% weaker in the third quar­ter.

The Dow has not had a pos­i­tive quar­ter in 2015. It dropped 0,88% in the sec­ond and 0,26% in the first as mar­kets po­si­tioned them­selves for ex­pected hikes in US in­ter­est rates. First set to oc­cur in June, a rates rise did not take place in Septem­ber, and there is now only a slim chance of a De­cem­ber hike. The first likely hike is set to hap­pen in March 2016, which gives some mar­kets a breather.

The JSE all share has eked out a pos­i­tive 0,64% this year, de­spite resources plum­met­ing 24%. The Nikkei gained 1,6% and the Paris CAC 40 — the best Euro­pean per­former — is up 4,2% in 2015.

For most global mar­kets the pic­ture looks less than rosy, amid the view that the US Fed will even­tu­ally hike. The Dow is 8,6% down in 2015 and the FTSE 100 has lost 7,6%. The volatile Shang­hai Com­pos­ite has shed 5,6% so far this year.

Over­all the pic­ture still looks chal­leng­ing for emerg­ing mar­kets, no­tice­ably on the cur­rency side. De­spite some come­back in Oc­to­ber, the rand has de­pre­ci­ated 16% against the dol­lar this year as the green­back con­tin­ues its ram­pant ride.

The dol­lar has ap­pre­ci­ated 7,8% against the euro in 2015 and nearly 3% against the pound. It is also partly the strong dol­lar that is mak­ing the Fed hes­i­tant to hike, as it damp­ens ex­port growth in the US and so con­trib­utes to con­tract­ing GDP growth.

This hes­i­tancy is linked to re­newed de­fla­tion­ary con­cerns. De­spite the huge stim­u­lus pumped into global mar­kets since 2008, US con­sumer in­fla­tion is strug­gling to reach 2%.

The weaker rand has ben­e­fited some rand hedges. SABMiller has rock­eted 28% on AB InBev’s takeover bid, which val­ues SABMiller at R900/share. Other rand hedges in­clude Woolies, adding 25% on its Aus­tralian David Jones takeover, and Stein­hoff, gain­ing 42% on its en­vis­aged Frank­furt list­ing. Mondi is up 52%. The lag­gards are mainly min­ing stocks. An­glo Amer­i­can is down 46% and Kumba Iron Ore has lost 67%.

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