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PSG daily investment update 23 April 2019
Date: 23 April 2019 Category: Stock Market |
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In our continued efforts to give our readers a broad number of views, opinions and information, we continue to provide PSG's daily market updates and add our own daily rant at the end.
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Short summary of PSG's market commentary for 23 April 2019
South Africa
The JSE was closed in observance of Easter Monday.
United States
The price of US shares dropped on Monday ahead of the release of corporate quarterly earnings and economic data this week, following a long holiday weekend. At 18h00 the Dow had lost 0.10%.
Europe
Most European markets were closed in observance of Easter Monday.
Hong Kong
Markets in Hong Kong were closed in observance of Easter Monday.
Japan
Japan’s Nikkei endured a choppy day of trade on Monday as investors remained cautious ahead of the Golden Week holiday later in the week. The Nikkei ended the day 0.25% higher.
Rand
The local currency began the week on the back foot against the dollar amid thin trading due to public holidays. At 18h25 the rand traded R14.16 against the dollar.
Precious metals
Gold prices jumped on Monday boosted by a drop in equities and an upsurge in crude oil prices. At 18h30 spot gold was trading at $1 278.53 an ounce.
Oil
Oil prices surged to a near six-month high on Monday amid concerns over tight global supplies after Washington vowed to further restrict Iranian oil exports. At 18h35 a barrel of Brent crude was trading at $74.68.
The JSE was closed in observance of Easter Monday.
United States
The price of US shares dropped on Monday ahead of the release of corporate quarterly earnings and economic data this week, following a long holiday weekend. At 18h00 the Dow had lost 0.10%.
Europe
Most European markets were closed in observance of Easter Monday.
Hong Kong
Markets in Hong Kong were closed in observance of Easter Monday.
Japan
Japan’s Nikkei endured a choppy day of trade on Monday as investors remained cautious ahead of the Golden Week holiday later in the week. The Nikkei ended the day 0.25% higher.
Rand
The local currency began the week on the back foot against the dollar amid thin trading due to public holidays. At 18h25 the rand traded R14.16 against the dollar.
Precious metals
Gold prices jumped on Monday boosted by a drop in equities and an upsurge in crude oil prices. At 18h30 spot gold was trading at $1 278.53 an ounce.
Oil
Oil prices surged to a near six-month high on Monday amid concerns over tight global supplies after Washington vowed to further restrict Iranian oil exports. At 18h35 a barrel of Brent crude was trading at $74.68.
Our daily update
So back to business after the Easter holidays. Yesterday we provided readers with a detailed economic and investment outlook from Citadel Wealth Management. Below a snippet of the article.
South Africa’s year ahead will be divided into two halves, namely pre- and post-elections. Pre-elections, the focus is likely to remain on politics rather than economics, with the usual political jostling and campaigning dominating headlines. However, the February Budget Speech will be key in assessing South Africa’s economic progress over the past year, as well as judging how well the ruling party and Finance Minister Tito Mboweni will handle the challenges of a rising budget deficit, falling tax revenue, an excessive government wage bill and poorly performing State-Owned Enterprises (SOEs). Thus far, South Africa has managed to satisfy credit rating agencies – especially Moody’s, which has retained its investment-grade rating for the country – through avoiding such populist measures as nationalising assets or proceeding with the nuclear deal, while taking the very unpopular step of raising the VAT rate from 14% to 15%.
However, this is an election year and it may prove more challenging to avoid similar moves. Mboweni will need to balance social deliverables with the very low growth environment, the poor tax revenue that it yields and avoid a deficit blowout in order to continually satisfy the ratings agencies. The country’s direction after the elections will depend on the election outcome. If the ANC wins back 60% or more of the country’s votes, representing a strong vote of confidence in Ramaphosa’s leadership, he will finally have the mandate needed to implement the policies necessary to boost the economy, and business and consumer confidence will likely rebound, which should be positive for financial markets. However, economic growth wouldn’t be expected to recover significantly even in this scenario, as these policies would take time to deliver results. We would therefore probably only see their real benefits a few years down the line. Add to this scenario the possibility that the US Fed hikes rates less than expected, the US and China reach a mutually beneficial trade agreement, and that China possibly takes the decision to strongly stimulate its economy, we could also see some welcome relief for South Africa, the JSE and the currency in the second half of the year.
However, if the ANC fails to achieve the desired result, we could see a repeat of 2018, with an economy slowly going nowhere, which could possibly place the currency under further pressure. With this in mind, we expect South Africa to achieve growth of around 1.2% in 2019, and given stable inflation rates and our muted growth outlook, the South African Reserve Bank (SARB) is unlikely to continue hiking rates during the course of this year. If, however, Ramaphosa and government are able to begin implementing the right policies, economic growth could rise to 2% over the next two to three years. See the full article here.
South Africa’s year ahead will be divided into two halves, namely pre- and post-elections. Pre-elections, the focus is likely to remain on politics rather than economics, with the usual political jostling and campaigning dominating headlines. However, the February Budget Speech will be key in assessing South Africa’s economic progress over the past year, as well as judging how well the ruling party and Finance Minister Tito Mboweni will handle the challenges of a rising budget deficit, falling tax revenue, an excessive government wage bill and poorly performing State-Owned Enterprises (SOEs). Thus far, South Africa has managed to satisfy credit rating agencies – especially Moody’s, which has retained its investment-grade rating for the country – through avoiding such populist measures as nationalising assets or proceeding with the nuclear deal, while taking the very unpopular step of raising the VAT rate from 14% to 15%.
However, this is an election year and it may prove more challenging to avoid similar moves. Mboweni will need to balance social deliverables with the very low growth environment, the poor tax revenue that it yields and avoid a deficit blowout in order to continually satisfy the ratings agencies. The country’s direction after the elections will depend on the election outcome. If the ANC wins back 60% or more of the country’s votes, representing a strong vote of confidence in Ramaphosa’s leadership, he will finally have the mandate needed to implement the policies necessary to boost the economy, and business and consumer confidence will likely rebound, which should be positive for financial markets. However, economic growth wouldn’t be expected to recover significantly even in this scenario, as these policies would take time to deliver results. We would therefore probably only see their real benefits a few years down the line. Add to this scenario the possibility that the US Fed hikes rates less than expected, the US and China reach a mutually beneficial trade agreement, and that China possibly takes the decision to strongly stimulate its economy, we could also see some welcome relief for South Africa, the JSE and the currency in the second half of the year.
However, if the ANC fails to achieve the desired result, we could see a repeat of 2018, with an economy slowly going nowhere, which could possibly place the currency under further pressure. With this in mind, we expect South Africa to achieve growth of around 1.2% in 2019, and given stable inflation rates and our muted growth outlook, the South African Reserve Bank (SARB) is unlikely to continue hiking rates during the course of this year. If, however, Ramaphosa and government are able to begin implementing the right policies, economic growth could rise to 2% over the next two to three years. See the full article here.
Our JSE All Share index daily performance calendar
Visit our JSE Calendar tracker page for a expanded version of the calendar below
The graphic below provides the daily returns of the JSE All Share Index (J203) on a calendar chart. Provides a great overview of the All share index over the course of the month. It will be updated daily with our daily investment update as received from PSG.
So the JSE All Share Index has increased by almost 5% for the month of April 2019. This is by far the strongest showing of any of the months of 2019 and the JSE All Share Index looks set to provide investors with four straight months of positive returns. See our 2019 Calendar tracker for more.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article