Joy Immelman (Main Author)

Despite a volatile year, 2019 ended on a high note for global equities as a result of:

• Firm Phase 1 trade agreement between the US and China;
• A decisive Tory victory in the UK, which paved the way for a less uncertain Brexit; and
• A backdrop of easy monetary policy.

For market watchers and investors, the biggest surprise of 2019 was arguably the generally good performance of global equities. Overall, global equity prices were supported by the accommodative stance of monetary authorities. Also, interest rates were kept low – and even cut – in some geographical jurisdictions.

On the local front, the SA Reserve bank (SARB) cut the repo rate by 25bps to 6.5% in July. It was left unchanged in September.  The domestic economy remains weak.

Average inflation was 4.3%, which was below the mid-point of the SARB target range.  

The Rand traded in a volatile range – from a low of USD/ZAR 13.97 to a weakest level of USD/ZAR 15.50 in mid-August.

The appearance of a yield curve inversion has market watchers spooked…

Over the past few months, there has been a great deal of anxious chatter about the possibility of a recession in the US. Arguably, much of this fear stems from what is known as the ‘yield curve inversion’.  Historically, yield curve inversions foreshadow a recession. 

The broader, global view…

• The ongoing and often vicious trade dispute between the US and China has led to a material slowdown in global trade during the first half of 2019;
• Major Central banks, in particular the US Federal Reserve (FED) and the European Central Bank (ECB) have indicated that they will probably provide additional stimulus during the second half of the year to help offset some of the weaknesses caused by the slowdown in global trade;
• South Africa has not been immune to the negative effects of the trade disputes and export performance in 2019 has been adversely affected by the slowdown