This was an extremely bumpy month on so many fronts.
Politically, we had the positive signs of senior people being held accountable for their actions and the power of the constitution affirmed. On the other hand, the widespread violence and looting did the country no favours.
I personally hit an all-time low when I saw the terrible looting in KZN. I really questioned the wisdom of my decision to stay in South Africa. A couple of days later my mood changed when I saw people banding together to clean up the mess and safeguard the neighborhoods. This, along with the many WhatsApp videos sharing the unique South African way of finding humour in the horror, reminded me why I love this country.
JSE
The JSE reflected our feelings and fell sharply after the riots. It improved nicely once it became clear that law and order was going to prevail. We actually ended the month 4% up on June!
Offshore
The rioting underscored the importance of not having all your investments in South Africa. The investment specialists recommend that you have between 40% and 55% of your assets physically offshore.
The offshore markets have done well with the USA delivering 18% so far this year and the UK, 15%. The best performing asset classes over the past 5, 10 and 15 years was global equity when converted into rands. The table below gives the top 3 asset classes over the period, along with the corresponding inflation rates
Looking forward
Most of the analysts I have listened to over the past month have said that the local equity and bond markets should do well over the next 3 months while offshore equities should provide decent returns over the next 6 to 12 months. Sector and portfolio selection will be important.
Some good news
In February, I noted that a managing the public sector wage bill will play a key role in making the country financially healthy. At that stage, the unions were looking for a 7% increase. It looks like they have settled for 1.5% so we are heading in the right direction.
It also looks like the third wave has peaked and that our vaccination programme is finally gaining momentum. Let’s hope we get this Covid thing under control. I have had too many people in my circle die.
Till next month
