Local Markets:

In local currency, SA Bonds 0.7%, SA Equities -3.1%, Listed Property -0.4% and cash returned 0.6%.
Sector returns: Industrials -1.6%, Resources -9.9% and Financials 0.2%.
Exchange Rates:
The Rand appreciated against the US Dollar by 2.6%, the Euro by 4.8% and the Pound by 4.3% in February.

Offshore Markets:
Nikkei -0.7%, FTSE100 0.6%, S&P500 3.7%, MSCI ACWI 2.8% and MSCI EM 3.1%
The ALSI was down -0.5% in US dollars.

Commodity prices:
US$ Gold price increased in February to $1 246/ounce.
Platinum price increased to $1 023/ounce.
Oil price decreased slightly in February, finishing at $55.7 per barrel.

A bit more detail on the different asset classes:


  • Equities gave a good proportion of January’s gains back again in Feb (down 3.1%) with significant sector rotation.  The Rand broke through R13 to the US$ gaining 3% in February.  In the month we had SONA, the Budget, a number of company results and ongoing White House shenanigans.  The biggest move on markets came from the Resources sector which fell 10%, after January’s 11% gain.
  • Just note for those slavishly looking at the 1-yr returns, while the ALSI is still up around 6.3% for the year, last year March was a very strong month.  Therefore, if the market doesn’t show decent gains this month, the 1 year return will fall to 0%.
  • The fact that the domestic market has basically gone nowhere over the last 2 and a half years is starting to impact returns over the longer term.  Over the last 3 years the General Equity and the MA High-Equity sectors have respectively gained only 4.6% and 6.2% per year, below cash and inflation. Even over 5 years, returns have fallen to single digits.

SA Equities

  •  The ALSI ended February 3.1% lower.  While losses were fairly broad-based, Resources led the way down, closing the month 9.9% lower.  Financials were flat (+0.2%) while Industrials were 1.6% lower.  YtD, the ALSI is still up 1.1% following January’s 4.3% gain.


  • Heavy declines from across the sector following January’s strong gains.  Despite most companies even exceeding strong earnings expectations, the General Mining sector lost 13.2% with declines from BHP (-14.6%) & Anglos (-11.6%).  Assore was only 2% lower while Exxaro ended the month up 1.5%. Sasol was 6.6% lower and even the precious metal companies delivered negative returns despite stronger commodity prices.  The Gold sector was 12.5% lower and Platinum stocks were 10.7% weaker at the end of February.  Despite most companies coming out with decent results and commodity prices holding-up well (Iron Ore even gained 10% in Feb), the fast accelerating pace of future earnings expectations has been moderating resulting in some profit-taking after very strong gains over the last few months.


  • A mixed bag in February.  On the negative side, we saw some sharp declines from shares such as Richemont (-9%, understandable after Jan’s 16% gain), Mediclinic and Aspen respectively falling -8.7% and -8.0% (disappointing trading updates) and MTN lost 4.5%.  Naspers closed the month 1.9% lower.  On the positive side, Retailers had a decent month as domestic inflation and interest rate expectations moderated, British American Tobacco (BATs) held up well (+0.2%) despite the stronger Rand and both Steinhoff (+7.8%) and Shoprite (+5.7%) rallied on the back of their announcement to terminate acquisition discussions.
  • Financials. Flat for the month.  Banks were 0.4% lower. Gains from Nedbank (+5.5%) were offset by declines from Absa (-4.3%) while Standard Bank and Firstrand were practically unchanged.  In the rest of the sector, we saw strong gains from Sanlam (+4.3%), Old Mutual was marginally lower (-0.7%); sharp declines from Rand-hedge property stocks were offset by decent returns from the domestic guys.

SA Listed Property

  •  The SA Listed Property Sector (SAPY which excludes the UK property companies (Capital & Counties and INTU)) was marginally lower (-0.4%) in Feb, but we saw a significant divergence at stock level.  Those companies with predominantly offshore assets came under pressure with NEPI (-5.9%), Rockcastle (-6.1%) and Redefine (-2.4%) the primary decliners.  On the other side of the spectrum, those with mainly domestic exposure, especially in the retail sector, saw decent gains.  Hyprop and Resilient were up 4.5% and 2.3% respectively. On the non-SAPY stocks, both Capital & Counties (Capco) and Intu came out with reasonable results and a stable outlook.  This helped to offset some of the ZAR-strength in Feb resulting in both stock showing decent gains.  Capco was up 3.8% and Intu gained 2.7%.  Hammerson also added 4.6% in the month.

SA Bonds

  • The ALBI had another decent month gaining 0.7% on the back of a stronger Rand and global bonds continuing to gain some lost-ground after the sell-off in the last 3 months of 2016.  That said, increased domestic funding requirements (following from the Budget) and a FED becoming increasingly hawkish, dampened sentiment somewhat on the local market.
  • Over the 12 months, SA bonds have done well, gaining 13.5%.  An improvement in the outlook for domestic conditions (increasing likelihood that inflation has peaked) could continue to provide some support to our market going forward, helping to offset the onslaught from negative sentiment towards global yields
  • In February global bonds continued to recover some of the losses we’ve seen over the second half of 2016. The Barclays Global Aggregated Bond Index gained 0.5% (in US$) after having fallen more than 7% in the Q4 2016 on perceptions that US growth will accelerate on the back of fiscal expansionary policies.


  • Global equities had another strong month with the MSCI ACWI gaining 2.8% (in US$) in February, bringing the YtD gains to 7.9%.  While gains over recent months were primarily driven by strong advances from more cyclical sectors such consumer discretionary, resources and financials, gains in February were more broad-based.  More defensive sectors bounced back in February due to strong results.
    While the offshore picture looks strong in US$-terms, from an SA perspective, the MSCI ACWI was down 0.3% in rand-terms over the month as the currency strengthened roughly 3.0%.
  • Over the 12 months, the MSCI ACWI is up a healthy 22.1% (in US$).  However, due to Rand-strength, global equities are up a mere 1.2% in ZAR over 12 months.

Over the last year
Looking a bit further back, returns on all asset classes remain fairly muted over the 12-months to the end of February.  This therefore translates into muted returns from most unit trust sectors over the year.  The General Equity sector average is up only 6.6% and he MA High-Equity sector has returned a mere 4.2%.
Returns for the last 12 months remain fairly muted for basically all asset classes:
ALSI:                      6.3% (not too bad, but a strong March ’16 (when the ALSI gained 6.4%) will be rolling out of the base)
Cash:                     7.5%
Bonds:                  13.5% (best performing asset class)
SA Property:      11.0%
Foreign Eq:         1.2% (in ZAR), but up 22.1% (in USD)

Report by Investec Asset Management 28 Feb 2017