If you are looking at your investments for the first time since 1 January today, you would be pleasantly surprised and none the wiser regarding the drama caused by the geopolitical conflicts and trade wars initiated by Trump. Equities in the US are trading at all-time highs. We see the S&P500 index up almost 6% for the year to date. The star performers, however, are South Africa, Germany and Hong Kong, where the index returns are around 20% year to date. The South African market is driven by the Resources index, which is up close to 50% so far. Gold has also helped a lot of our SA companies. We see Gold up by close to 28% and Platinum hitting 59%.
Less volatile assets like bonds and cash are still providing us with decent returns. Interest rates are still high due to the ever-present threat of rising inflation, and the performance of the rand is surprising. If you look at how the rand is doing against the US$, you would be surprised to see the US$ down almost 7%, with trading at around R17.50 for one US$. The good news is, however, short-lived if we look at other currencies. The rand is 6% weaker against the euro and 1.3% weaker against the pound. Looking at these results we have to admit that they do not reflect rand strength, but rather US$ weakness. We have to remember that the US$ has become way too strong over recent years and it will be positive for US companies if it weakens further. The rand is still very exposed to political risks in SA. Our Government of National Unity is hanging by a thread. Make use of a stronger rand to implement any planned international equity exposure.
Crypto currencies, especially Bitcoin, are here to stay with a multitude of big international investment houses providing exposure via ETFs. We see Bitcoin trading at around $109 000, up 15%. There is still no trustworthy way to value Bitcoin, so buying and holding it should be done with this in mind. We can expect interest rates to come down further during the year which will be good for bonds and property. Economic growth in the US is still strong but in SA we are still battling to make any headway. Two big positives for our local economy is that Eskom is keeping the lights on and the price of oil has come down a lot.