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Quarter One Done and Dusted – A Brief Recap

While some are still only returning from their Easter break, the first quarter of 2018 has flown past in the blink of an eye. When looking at the markets for the last quarter, to say it was merely eventful would be one big understatement.

In January, the local market was still trading up after the positive news from the election of Cyril Ramaphosa in mid December. The banks, financial services, and consumer goods companies rose in value and the JSE All Share Index reached an all-time high near the end of January. Unfortunately, drama was to follow when fear of an interest rate hike by the Fed resulted in a big correction in the US markets. As always, the US knock on effect impacted adversely on the JSE and the market ended close to flat for the month.

In February, this downward trend continued despite the rand strengthening, inflation declining and the possibility of an interest rate cut by the SA Reserve Bank. Most investors with exposure to listed property would have had their portfolios adversely affected by the decline in price of the Resilient group of companies, as a result of being targeted by a short seller. This was first highlighted in January and by the end of February the SA Listed Property index was down nearly 20%. With global markets still very volatile the JSE ended February down just under 2%.

In March, US president Trump started to impose tariffs on Chinese goods with China recently retaliating announcing a 25% levy on US imports including products such as soybeans, cars and whiskey. The longer this so called “trade war” drags on, the more uncertainty will seep into the market which will have a greater negative effect on not only market performance but also on emerging market currencies. We have already seen the Rand depreciating back to over R12 against the US Dollar. Some good news for the month was that our economy grew by 1.3% year on year which is more than was expected by National Treasury and we also escaped a third junk rating when Moody’s affirmed its investment grade credit rating. Moody’s also revised the country’s credit outlook to stable from negative. An interest rate cut by the Reserve Bank of 25 basis points provided some respite to debt-burdened consumers under mounting pressure following the VAT increase effective 1 April. The JSE ended March down 4.9%.

 

Source : Seed Investments (31/03/2018)

The table above illustrates the performance of the different asset classes as at 31 March 2018. This emphasises Seed’s best investment view to invest our clients’ money across all asset classes mainly in multi asset funds as well as investing for the long term.

With all news and financial information freely available to the public it is very easy to let your emotions get in the way of making smart financial decisions. In these times of market volatility it is always important to remember not to make emotional short term decisions which will have a detrimental effect on the long term performance of your investment portfolio.

If there is any need please get in touch with one of the Seed Wealth specialists and we will gladly assist and guide you on your investment journey.

Kind regards,

Renier Hugo

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