Halfway through 2023

Six months have passed and we can do a small recap of what has happened. Most equity markets had a strong start to the year but then the South African and Chinese markets fizzled out a bit. On the JSE the biggest underperformers were the Resources stocks, especially the platinum miners. The two worst performing large-cap companies on the JSE so far this year are Impala Platinum and Anglo Plats with -40%. The best performers were European, Japanese and American markets, where technology companies in the USA had a 32% rise, European markets around 16% and Japanese equities went up 27%. The FTSE in London also did poorly with only 1% return for the six months.

Bonds also did not perform well, with the yields on the 10-year bonds of most countries rising. This is mainly due to the rising shorter-term interest rate policies implemented to combat rising inflation. The upside to rising interest rates, is the return you get on your cash balances. If we look at the performance of the rand, we can see it falling quite significantly against the pound by -16%, the US$ -10.5% and the Euro -13%.

As a diversified international investor, your portfolio should, however, show some healthy positive returns for the year to date and as the inflation fears subside, lower interest rates can be expected, which will boost the outlook for shares and bonds. Although the economy in the USA is showing remarkable resilience in the face of the higher interest rates, there is still a possibility of a mild recession in 2024, which will reflect negatively in the valuations of companies. However, this is not something that should keep you from investing for the longer term. Sitting on the sidelines is not a good investment strategy and the graph below shows you what the impact of early investing can be.

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