Approaching the halfway mark for the year

In 2017 we saw pretty much the same type of South African equity market performance as we are seeing this year. It was very choppy and ended up only marginally higher by the end of June 2017. Then things started warming up and we ended the year with an 18% return on the JSE All Share index. 

Investment in any solid company is very frustrating at the moment if you are watching the share price on a weekly basis because there is no direction. In the smaller companies you are either 30% up or 30% down and if feels more like speculating than investing. Platinum, Gold and Property are the worst performing sectors and Resources and Banks the best. It seems likely that interest rates in the US will rise faster than expected which will translate into a weaker rand and emerging market bonds. This will be good for the international portion of your portfolio.   We will look into the performance details of markets at the end of June.

When we spoke to investors from Europe recently the only topic they wanted to discuss was the land issue. They confessed they were very fearful of the new debate on land expropriation without compensation and that many Europeans owning property in SA were selling. The IMF has also stated recently that they do not expect SA’s growth to be more that 2 per cent because of the uncertainties surrounding this issue. Although a land expropriation policy that is planned and executed sensitively can contribute to a more productive agricultural sector, the current lack of clarity only adds to some of the irrational fears growing in our minds.

South Africa is, and always will be, a country with vastly different points of view from the different sectors of our community. In itself that is not a problem. The important thing is for rational people, representing all the different sectors, to be able to come together and debate these issues in a calm and logical way and then implement the best possible solution.

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