Boom & Gloom: July 2016

Boom & Gloom

Boom & Gloom: July 2016

Our View of the Investment Markets

This table reflects our view of the relevant assets, based on expected performance.

Relevant assets



South African consumers are suffering financially and as a result consumer confidence levels are similar to the time during the crash after the IT bubble around 2000. This is placing a cap on retail and vehicle sales.


National Household Disposable Income is at levels last seen in the 1960’s. Coupled with very low levels of credit growth, Household Final Consumption’s subdued contribution of -1.3% to Real GDP in the first quarter of 2016 is understandable. Interest rates, inflation, job losses and global demand put a major amount of pressure on consumers in the first quarter.


On a positive note – manufacturing production showed some green shoots, growing at just above 4% year on year (YOY). It seems that import substitution and outright export growth are gaining traction. Exports grew around 17% YOY for the past two months, while imports grew by 2.7% YOY in May 2016 and 9.7% YOY June 2016 (substantially lower growth than exports).


Offshore investors bought R6bn and sold R3.2bn in bonds in July. R58.9bn in bonds were bought and R80.2bn in equities were sold during the year up until July 2016.


Domestic inflation has been behaving fairly well given the currency depreciation over the past year or two. Subdued consumer demand limited the second round effects, slowing inflation being passed on to the consumer. The market expects CPI to grow at 6.1% YOY in July, the number will be published later this week.



Total return to 31/7/2016, in domestic currency

Mark Perf

Source: Bloomberg LP


Total return to 31/7/2016

Sect perf

Source: Bloomberg LP


Equity perf


Equity detractors




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Eugene Goosen

Eugene Goosen


Sources: Bloomberg LP, Credit Suisse, RMB, BNP Paribas


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