BET­TER TIME FOR EQ­UI­TIES; RAND BOBS ABOUT

Financial Mail - Investors Monthly - - Analysis - Maarten Mittner

March saw some lift in global eq­uity mar­kets af­ter a tor­rid start to the year. The main cause was a more dovish stance by the US Fed­eral Re­serve. Af­ter hik­ing rates for the first time in nearly a decade in De­cem­ber, the Fed at its March meet­ing in­di­cated a more cau­tious ap­proach by leav­ing rates un­changed, cit­ing con­cerns about global growth mainly re­lat­ing to China.

Af­ter end­ing the first week of trad­ing in 2016 5.11% down, the JSE all share was up 3.07% for the quar­ter af­ter firm­ing 5.7% in March.

The bet­ter quar­terly per­for­mance was the re­sult of re­cov­er­ing min­ing stocks, with in­dus­tri­als also con­tribut­ing.

Gold con­tin­ued to out­shine the rest of the mar­ket, with the gold index end­ing the quar­ter 92% higher. Har­mony rose an in­cred­i­ble 240% over the quar­ter.

Banks and fi­nan­cials were also strong driv­ers, with the Fini 15 index end­ing the month 11.05% higher. The index rose 4.14% on the quar­ter.

Star per­former was San­lam, rock­et­ing a monthly 28% in March. Old Mu­tual rose 10% from al­ready high lev­els fol­low­ing its an­nounce­ment to split the com­pany into four parts.

Among banks, the re­cov­ery in Stan­dard Bank ma­te­ri­alised at last when it rose 21% in March to be up 16.7% for the quar­ter. FirstRand rose 9.11% in March and 14.16% in the quar­ter.

Rand hedges had a mixed month, with Stein­hoff adding 23.3% on a quar­terly ba­sis fol­low­ing its Frank­furt list­ing. MTN was flat for most of the quar­ter, end­ing just 1.74% up, and Naspers took a breather, end­ing the quar­ter 2.8% lower.

The re­cov­ery in the all share co­in­cided with a bet­ter month for de­vel­oped mar­ket bourses. The Dow Jones in­dus­trial av­er­age was 7.08% firmer in March and up by 1.49% for the quar­ter. The FTSE added 1.28% in March, but was down 1.08% for the quar­ter amid “Brexit” con­cerns.

Emerg­ing mar­kets also re­bounded. The MSCI Emerg­ing Mar­kets firmed 13.03%. It was up 5.37% in the quar­ter. Brazil’s Bovespa index rock­eted 16.9% in March, shrug­ging off eco­nomic and po­lit­i­cal crises.

It was another vo­latile quar­ter for the rand but it re­cov­ered 6.4% in the month to R14.79/$ from lev­els gen­er­ally re­garded as over­sold. For the quar­ter it eked out a 4.4% gain against the green­back. This was partly driven by a softer dol­lar, which made lit­tle head­way on the less hawk­ish sen­ti­ment ex­pressed by the US Fed. The euro strength­ened 4.6% in the quar­ter as the Euro­pean Cen­tral Bank mulled fur­ther stim­u­la­tory steps to ward off de­fla­tion in the euro­zone.

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