For local investors, December capped an incredibly challenging year. It was the first time in many years that all major global asset classes produced a negative real return. Notably, emerging markets seemed to bear the brunt of the risk-off environment throughout the year – which meant that it was another very disappointing year for investors on the JSE. Tellingly, the FTSE JSE All Share Index closed 2018 with a negative total return of -9.08%.
Global equities (USD) -9%
Global bonds (USD) -1%
Global Emerging Markets -15%
SA equity (Rand) -11%
SA property (Rand) -25%
SA bonds (Rand) +8
Breaking down the last Quarter
On the local front, the SA Reserve Bank (SARB) raised the repo rate by 25 bps to 6.75% in November.
The Rand had a relatively seesaw time of it. The USD/ZAR traded in a range from USD/ZAR14.75 in October to R13.53 in early December – and ended the year at R14.35. However, the currency is expected to remain vulnerable.
Core inflation remained subdued, while CPI is expected to average 4.6% in 2018.
Looking abroad, investors had a disastrous Quarter with concerns around slowing growth in the US and China. The MSCI ACWI (All Country World Index) returned -12.8% over the Quarter.
Source: Coronation Asset Managers / Anchor Capital