The investment markets

The first quarter of 2019 saw an overall recovery across most markets, local and international.

South Afrcian mining companies had a good start to the year. This was mostly due to the skyrocketing price of palladium. Lonmin Plc, Impala Platinum Holdings, Sibanye Gold Ltd and Anglo American Platinum returned 70.9%, 66.3%, 56.9% and 38.3% respectively. As a result, the JSE Mining Index ended the quarter on a positive 22.91%. The JSE/FTSE All Share index gave a total return of 7.9%, it’s best first quarter performance since before the financial crisis of 2008. However the retail sector did not fare so well, with many big names posting major declines in the first quarter. Worth noting are Mr Price down by 23%, Shoprite which fell by 17% and Woolworths which shed 16% as the shaky economy took its toll on consumers’ pockets.

On the international front, the U.S. government shutdown, which lasted for 35 days, finally ended at the start of January. The Federal Reserve announced that plans to increase interest rates would be put on hold. U.S. Equities posted significant gains on the prospect of a resolution to U.S.-China trade tensions. (The U.S. halted plans to impose tarrifs on $200 billion worth of Chinese goods.) The S&P 500 delivered a stellar performance of 13.47%. This was mostly due to the technology stocks Apple and Microsoft and notably Xerox.

The outlook on growth and inflation was lowered and this was evident in the U.S. Treasury yield curve inverting, which occurs when the yield on shorter maturities rises higher than the yield on longer maturities. The inversion of the yield curve has historically always preceeded a recession in the United States.

In the United Kingdom, despite the Brexit furore almost all areas of the markets bounced back from the bleak performance of 2018. The FTSE 100 was up 9.49% for the quarter with technology stocks driving the performance.

In China, there are significant signs of a slowing economy. Tax cuts and measures that support bank credit growth have been put in place to stimulate domestic demand. China’s imports declined 5.2% year on year, however, all markets in the Asia (ex Japan) region closed higher, due to the progress in the U.S.-China trade negotiations.

The first quarter of 2019 ultimately proved to be a positive one. The U.S. & China’s trade war has reached a ceasefire, the likelihood of Trump getting his Mexican wall is fading and the UK remains a part of the EU until 31 October 2019.

Domestic (rand-denominated) fund returns