- May saw equities return -3.5% while bonds lost 2.0%. Listed property also declined by 6.0%, with cash the only positive asset class, at 0.6% higher for the month.
- The best performing sector for May 2018 was resources, up 4.8%. Industrials and financials were both negative for the month, ending -5.1% and -6.3% down, respectively.
- The rand weakened 1.8%, against the USD, whilst it strengthened 1.8% and 1.7% against the EUR and GBP respectively in May 2018.
- In May, SA equities had net foreign outflows of USD 1.6 billion; this was the first month of net outflows since September 2017. Meanwhile, SA bonds had their largest ever monthly foreign outflows of USD 2.4 billion. Year to date, SA equities have received USD 1.2 billion of foreign inflows while SA bonds have net foreign outflows of USD 276 million.
- Gold fell 1.3% to USD 1298/oz. amid continued strength in the US Dollar.
Listed property continued its downward spiral in May declining by 5.9% during the month which takes the sectors year-to-date decline to 18.6%. The 12-month return to end May for listed property is negative 6.5% compared with 8% from the ALSI, 10.4% from the ALBI and 7.4% from cash.
Interesting if one compares it with the position as it stood at the end of December 2017 with a calendar year return of 17.2% and a three year annualised return of 11.7%, it could do no wrong.
Now five months later, the annualised return over the three years to 31 May 2018 has reduced to just 2% p.a. following a -18.6% decline year to date.
This poor performance comes after years of the listed property sector being the investor’s darling, as shown below. The learning from this is DIVERSIFICATION and the fact that all things will mean revert. It is unfortunate for those, who after five years of extraordinary performance, expected the trend to continue.