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

MACRO REVIEW

ECONOMIC ACTIVITY

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.

Economic

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.

Economic

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).

EXTERNAL ACCOUNTS

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.

INFLATION

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.

Market REVIEW

MARKET PERFORMANCE

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

Mark Perf

Source: Bloomberg LP

SECTOR PERFORMANCE

Total return to 31/7/2016

Sect perf

Source: Bloomberg LP

TOP 10 JSE EQUITY PERFORMERS

Equity perf

TOP 10 JSE EQUITY DETRACTORS

Equity detractors

COMMODITY PERFORMANCE

Commodity

 

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Eugene Goosen

Eugene Goosen

 

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

Disclaimer

The information in this document is proprietary to Ora Fund Managers (Pty) Ltd (Ora) and is not to be reproduced, distributed, published or used for any purpose other than the evaluation of any proposal contained in the document, except with the written permission of a representative of Ora. The information contained in this document (together with any opinions expressed or further information provided in connection with this document) is of a general nature and provided for illustrative purposes. It does not address the circumstances of any particular person or entity and it is not a recommendation or advice in relation to any transaction or investment. In making this information available, we are not purporting to act in any way as an advisor or in a fiduciary capacity. No one should rely on any of this information without appropriate advice from an independent financial adviser, based on a thorough investigation of the investor’s specific circumstances. While we have taken care to ensure that the information is accurate and not misleading, Ora makes no representations or warranties of any kind with respect to its accuracy, completeness or correctness. The information is provided on the clear understanding that Ora will not be held liable or responsible for any loss or damages that may be suffered by any person or entity as a result of that party placing reliance on or failing to act on any of the information provided.

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