The investment markets

The first quarter of 2021 will be remembered for the large stimulus package announced by US president Joe Biden, Covid vaccine roll-outs and the rise of the retail trader.

In the United States the Dow Jones achieved an 8.13% total return in USD and the S&P gave a 6.05% total USD return for the first quarter. The $1.9 Trillion stimulus package combined with the vaccine rollout gave fuel to the major indices which hit record highs during the first three months of the year. Treasury Yields on the 10 year rose to 1.77% giving concerns that inflation would rise dramatically and that the Fed would have to raise rates faster than anticipated caused a brief period of concern but the optimism that is currently in the markets soon erased all fears and just continued to rally higher.

The wallstreetbets group on Reddit (new age of retail traders) showed how powerful a group of traders can be when they all push in the same direction. This group latched on to a US company GameStop and pushed the share price to astronomical highs before whipsawing the share to massive gains and losses on any given day squeezing short positions out of the market and getting one up on wall street.

In South Africa the FTSE/JSE All Share index returned 13.14% (Total Return) for the first quarter in Rands. The largest contributor to our overall performance came from the resource sector, the FTSE/JSE Resource 20 index provided an 18.75% return for the latest quarter. The bond market which is measured by the BEASSA All Bond Index returned a negative 1.74% return.

Looking ahead, sentiment for international markets remains quite bullish. The IMF forecasted global growth to be 5.5% for 2021. In South Africa we seem to be rolling along with the positive international mood (market performance) but a lot of problems remain, Eskom issues and ANC inaction seem the order of the day and until we can sort out our internal problems we can only continue to expect below average growth.

Domestic (rand-denominated) fund returns