MOOD IN GLOBAL MAR­KETS RE­MAINS UN­CER­TAIN

Financial Mail - Investors Monthly - - Analysis - Maarten Mit­tner

Fe­bru­ary would have been as dis­mal a month in the mar­kets as Jan­uary was, were it not for the re­bound in re­sources shares. Min­ing shares rock­eted in the month, way ahead of the in­creases in com­mod­ity prices, prompt­ing many an­a­lysts to ques­tion the sus­tain­abil­ity of the re­bound.

The JSE all share ended Fe­bru­ary marginally up 0.56% af­ter fall­ing 3.06% in Jan­uary. The Dow Jones in­dus­trial av­er­age added a monthly 0.30%, but the Ger­man Dax lost 3.09%. The MSCI World index shed 0.96%.

The min­ing rally was led by gold stocks. The gold price rose 11.3% in the month, but the gold index jumped 45.9%. Star per­form­ers in­cluded An­gloGold Ashanti, which firmed 51%, and Sibanye, which gained 62.8%.

Plat­inums had a more pedes­trian month, with the index gain­ing 18.6% on a 7.5% rise in the metal’s price. But it was a har­bin­ger of bet­ter things to come, with the index up 87% in the year to date at mid-March. The high fly­ers in­cluded An­glo Amer­i­can Plat­inum, which rose 41% in Fe­bru­ary, and Lon­min, which added 70% that month.

The big min­ing houses were not go­ing to be left be­hind. An­glo Amer­i­can dou­bled its share price from R50 to R103 in Fe­bru­ary on the ex­ten­sive re­struc­tur­ing ex­er­cise an­nounced by the group in the month. BHP Bil­li­ton rose a monthly 4%, but was down 8.8% for the year to end-Fe­bru­ary.

Fi­nan­cial shares had a neg­a­tive month. The Fi­nan­cial 15 index re­treated 2.8%. Banks were down 1.9% in Fe­bru­ary, Stan­dard Bank los­ing 2.6% and Bar­clays Africa shed­ding 5.5%. How­ever, mar­ket favourite FirstRand added 4.63% in the year to end-Fe­bru­ary, only to re­treat in March on sub­dued in­terim re­sults re­leased by the fi­nan­cial group.

Prop­erty re­mained a mar­ket stal­wart, with the index end­ing Fe­bru­ary up 3.34%.

The rand made a re­cov­ery of sorts in Fe­bru­ary. Af­ter fall­ing to a record low of R17.7893/$ on Jan­uary 11, it ended Fe­bru­ary at R15.88/$. How­ever, the mood in global mar­kets re­mained un­cer­tain. Af­ter the US rate hike in De­cem­ber 2015 mar­kets were brac­ing them­selves for a fur­ther four in­creases in 2016 against an in­creas­ingly risky global back­drop, in­clud­ing lower Chi­nese GDP growth and US de­fla­tion­ary con­cerns. More sta­bil­ity re­turned to the mar­kets in March as the US Fed­eral Re­serve kept rates on hold and cut the num­ber of fur­ther in­creases to an ex­pected two for 2016. To­gether with a fur­ther stim­u­lus an­nounce­ment from the Euro­pean Cen­tral Bank, the stage was set for more risk-on trade, which could boost emerg­ing mar­kets dur­ing the year.

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