brenthurst | the home of wealth - the power of independent … · 2018-05-11 · the power of...

THE POWER OF INDEPENDENT ADVICE

Brenthurst Wealth Management (PTY) LTD FSP No. 7833

WEEKLYWRAP I April 2016

WEEK IN REVIEW

08 APRIL 2016

GLOBAL MARKETS

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GLOBAL CONCERNS RETURN

AFTER A RELATIVELY SOLID MONTH IN MARCH, THE FIRST WEEK OF APRIL SAW A RETURN TO NEG-ATIVE SENTIMENT AND VOLATILITY, WITH GLOBAL GROWTH CONCERNS ONCE AGAIN BEING AT THE FOREFRONT OF INVESTORS’ MINDS. The change in sentiment comes largely on the back of continued weak economic data prints, as well as mixed messages from the Fed regarding the US economic recovery and the uncertain trajectory of interest rates. However, the end of the week saw a return to risk-on trade as commodities rebounded and Brent crude rallied above the USD42/bbl level. Oil prices rebounded on the news that major producers could reach a production agreement at the April 17 meeting, even if Iran does not partici-pate. A bullish report on US crude inventories also helped sentiment. Brent crude closed the week 8.5% higher. Following rather dovish commentary from Fed Chair-person Janet Yellen towards the end of last month, the Fed released their March FOMC minutes which indicated that it is divided as how to proceed with US monetary policy. Although all but one member voted for no change in the Fed funds rate in March, there was disagreement about when the next rate hike would be, with some members clearly more hawkish than others. The next FOMC rate decision will be at the end of April and while the market is not expecting a hike this early, a small chance in June remains priced in.

In the EURO AREA, the monthly monetary policy meeting was held, revealing wide-spread agree-ment among the Governing Council (GC) to main-tain the path of monetary easing along several dimensions. The GC sees increased downside risks to medium-term euro area inflation and real GDP growth, largely as a result of weak global demand and the oil price. Similarly in JAPAN, the case for further monetary easing also remains, with March composite PMI coming in below the desired 50 point level at 49.9. This hence indicates contraction in many areas of the economy. The Bank of Japan cut interest rates earlier this year and as long as the weak economic data trend continues, the likelihood of increased monetary stimulus remains. In contrast to the areas around the globe that are struggling economically, this does not seem to be the case in INDIA. The country has experienced a steady rise in manufacturing PMI since Dec last year, coming in at 52.4 in March, up from 51.1 the previ-ous month and the highest print in almost a year. THIS REINFORCES THE VIEW THAT INDIA IS ONE OF THE TOP PERFORMING ECONOMIES IN THE WORLD AT THE MOMENT. According to Bloomberg India is forecast to grow at 7.5% in 2016. This upcoming week, focus will be on growth at the IMF and World Bank meetings in Washington. The IMF has recently expressed concerns over glob-al growth, in particular for CHINA.


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DOMESTIC MARKETS

POLITICS DOMINATE MARKET MOVEMENTS

This report was compiled in association with Counterpoint Asset Management. www.cpam.co.za

THIS PAST WEEK, LOCAL NEWS CONTINUED TO BE DOMINATED BY POLITICS, WITH EVENTS CLEARLY HAVING SOME IMPACT ON MARKETS AS WELL AS ON THE RAND. After a long and entertaining performance in parliament, the movement by the Democratic Alliance and Economic Freedom Fighters to impeach President Jacob Zuma was unsuccessful and the currency suffered accordingly, moving back to above the ZAR/USD 15 level. However, news that the Guptas and Duduzane Zuma had quit their board posts at Oakbay as well as some well-respected figures calling for Zuma to resign, indicate that the political tide may be turning against the president. This, together with broad based USD weakness, saw the Rand recover somewhat and close the week at ZAR/USD 14.93.

AT A CONFERENCE LAST WEEK, S&P RATINGS AGENCY STATED THAT SA REMAINS ON THE BRINK OF A DOWNGRADE TO NON-INVESTMENT GRADE- THE MAIN RISK LIES IN WEAK ECONOMIC GROWTH. The fiscus, especially the needs of state-owned en-terprises, and political uncertainty could also have an impact as they may negatively impact policy implementation. The ratings agency has revised SA’s GDP forecasts lower to 0.8% (from 1.6%) and 1.8% (from 2.1%) for 2016 and 2017 respectively. Electricity constraints, labour relations, weak business confidence and policy implementation challenges were all cited as contributing to the constrained outlook. February manufacturing data was released indi-cating manufacturing output rose 1.9% y/y, outper-forming expectations of a -2.1% decline and up from the -2.5% decline in January. The increase in manufacturing production was largely owing to pos-itive contributions from food, petroleum, wood, ra-dio and TV, and electronics. While it is still early to say, it seems the weaker currency may finally be helping the manufacturing sector. However, with low global demand, the usu-al benefits of a weaker exchange rate on exports are likely to be muted.

WHILE THE POLITICAL TURMOIL WE ARE

GOING THROUGH SHOULD BE POSITIVE FOR

THE COUNTRY IN THE LONG RUN, IN THE

SHORT TERM THE UNCERTAINTY IS ADDING

TO THE RISK OF A DOWNGRADE BY RATING

AGENCIES TOWARDS THE SECOND HALF OF

THIS YEAR.


WEEKLYWRAP I March 2016

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UPCOMING ECONOMIC EVENTS

WEEK AHEAD

DATE EVENT PERIOD SURVEY PRIOR

SOUTH AFRICA

12-Apr BER Consumer Confidence 1Q -12 -14

13-Apr Retail Sales Constant YoY Feb 2.70% 3.10%

14-Apr Mining Production YoY Feb -5.40% -4.50%

UNITED STATES

13-Apr Retail Sales Mar 0.40% 0.00%

13-Apr PPI YoY Mar 0.30% 0.00%

14-Apr CPI YoY Mar 1.10% 1.00%

14-Jan CPI Ex Food and Energy YoY Mar 2.30% 2.30%

15-Jan Univ. of Michigan Sentiment Apr 92 91

CHINA

11-Apr CPI YoY Mar 2.40% 2.30%

11-Apr PPI YoY Mar -4.60% -4.90%

13-Apr Exports YoY Mar 10.00% -25.40%

13-Apr Imports YoY Mar -10.10% -13.80%

15-Apr Industrial Production YoY Mar 6.00%

15-Apr Retail Sales YoY Mar 10.40%

15-Apr GDP YoY 1Q 6.70% 6.80%

EURO AREA

13-Apr Industrial Production YoY Feb 1.30% 2.80%

14-Apr CPI YoY Mar -0.10% -0.10%

14-Apr CPI Core YoY Mar 1.00% 1.00%

15-Apr Trade Balance SA Feb 21.5b 21.2b


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Description Classification Currency Exchange Rate Week MTD YTD

ZAR/USD ZAR/USD ZAR 14.93 -1.90% -1.06% 3.63%

ZAR/Pound ZAR/GBP ZAR 21.11 -1.25% 0.45% 8.02%

ZAR/Euro ZAR/EUR ZAR 17.03 -2.06% -1.38% -1.26%

Dollar/Euro** USD/EUR USD 1.14 0.07% 0.28% 5.06%

Yen/Dollar YEN/USD YEN 107.96 3.24% 4.27% 11.36%

COMMODITIES

Description Classification Currency Price Week MTD YTD

Gold Gold Spot USD 1250.94 1.48% 1.48% 17.89%

Brent Crude Oil ICE Brent Futures USD 42.09 8.46% 4.36% 4.55%

Platinum Platinum Spot USD 977.50 1.11% 0.18% 9.64%

Copper LME 3 month Copper USD 4650.00 -3.83% -4.06% -1.17%

Silver Silver Spot USD 15.45 2.08% 0.07% 11.56%

Wheat Generic active future USD 455.25 -3.26% -3.85% -3.14%

Yellow Maize Generic active future USD 361.25 2.33% 2.77% 0.70%

Soy Generic active future USD 922.50 -0.16% 1.29% 5.88%

GLOBAL EQUITY INDEXES

(TOTAL RETURN)

Description Index Currency Index Value Week MTD YTD

Global MSCI World* USD 1632.20 -0.48% -0.83% -1.01%

United States S&P 500 USD 3852.72 -1.15% -0.53% 0.81%

Europe Euro Stoxx 50 EUR 5572.61 -1.24% -2.94% -10.50%

Britain FTSE 100 GBP 4924.47 1.08% 0.61% 0.68%

Germany DAX EUR 9622.26 -1.76% -3.44% -10.43%

Japan Nikkei 225 JPY 23892.67 -2.12% -5.59% -16.19%

Emerging Markets MSCI Emerging Markets* USD 816.82 -1.13% -2.30% 3.26%

SA EQUITY INDEXES

(TOTAL RETURN)


All Share JSE All Share ZAR 6970.46 -0.15% -1.42% 2.40%

Top 40 JSE Top 40 ZAR 6133.89 -0.33% -1.75% -0.27%

Shareholder Weighted JSE SWIX ZAR 18225.92 0.09% -1.14% 4.67%

Small Companies JSE Small Cap* ZAR 58959.29 0.59% 0.55% 12.00%

Resources JSE Resource 20 ZAR 1681.21 -0.18% -2.18% 10.72%

Industrials JSE Industrial 25 ZAR 12985.79 0.35% -0.74% -1.39%

Financials JSE Financial 15 ZAR 7590.33 -2.63% -4.45% 0.72%

SA Listed Property JSE SA Listed Property ZAR 2110.97 0.19% 0.46% 10.61%

Preference Shares JSE Pref Shares ZAR 1693.38 0.54% 0.53% 5.14%

SOUTH AFRICAN

FIXED INTEREST


All Bond BESA ALBI Index ZAR 490.49 -0.07% -0.38% 6.15%

Inflation Linked Bonds BESA CILI ZAR 239.36 1.02% 1.28% 3.34%

Cash STEFI Composite* ZAR 337.71 0.13% 0.15% 0.13%

WEEKLY TICKER


*Price Index (not Total Return) ** Negative indicates Euro weakness

Disclaimer: The document should not be seen as an offer to purchase any specific product and is not to be construed as advice or guidance in any form whatsoever. Investors are encouraged to obtain independent professional investment advice before investing. Investors should be aware that investing in a financial product entails a level of risk which depends on the nature of the investment. The merits of any investment should be considered together with the investor’s specific risk profile and investment objectives. Past performance is not necessarily a guide to future performance. Fluctuations in exchange rates and underlying investments may cause the value of international

investments or underlying investments, if included in the mandate, to go up or down. Illustrations are not guaranteed but are for illustrative purposes only. Brenthurst Wealth is an Authorised Financial Service Provider (FSP NO. 7833)

brenthurst | the home of wealth - the power of independent … · 2018-05-11 · the power of...

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