A year in review for investments

2018 was an eventful year for South Africa in which the country saw a new president, two new ministers of finance and two consecutive quarters of negative growth. 

2018 was an eventful year for South Africa in which the country saw a new president, two new ministers of finance and two consecutive quarters of negative growth. The SA Reserve Bank raised interest rates and markets were affected by events beyond our control, in other words, it was not an easy year for investors.

The main drivers for the local market were mostly of an international nature. While South Africa began the year with a new president and the markets were hit by “Ramaphoria” in the first few months, the feeling soon ended with the crisis in Turkey, which turned into a mini emerging markets crisis. In the second half of 2018, a local recession and a looming trade war between the major global economies had a negative impact on the local market.  

The local market recorded a loss of 14.55% for the year to date, with the bulk of the losses coming in the second half of the year. The industrial index closed a massive 21.51% down year-to-date, followed by the financial index with a loss of 7.29%. The resources sector closed 3.50% up for the year on the back of stronger international commodity prices. The darling of the South African investor for many years, the property market, came to a spectacular crash this year, with the sector recording a loss of almost 26%.

The global markets also had a difficult year. In the US, the S&P 500 recorded a 1.5% loss for the year-to-date. The Shanghai composite index is firmly in bear market territory, with a loss of 21.89% for the year. In Germany, the DAX lost 16.89%, while the FTSE in London was down 11.83% driven by Brexit fears. 

Although the rand traded stronger in the first half of the year following a vote of confidence in President Ramaphosa, the currency came under pressure after the recession announcement. The currency that traded around R12.37 against the USD in the beginning of the year is currently trading at R14.13 to the dollar.  

Brent crude oil, which traded at around $77.64 per barrel at the beginning of the year – after spiking to a record high – fell all the way to $62.14 per barrel.

While this was truly a difficult year for investors, a silver lining is that most equities are better priced than the previous year and some buying opportunities exist. Moreover, South Africa emerged from the local recession with a massive 2.2% growth in the third quarter. Another calming factor is the trade talks that are underway between the US and China. 

This is our last newsletter for the year. Thank you for your association, and we wish you and your family prosperity and health, while we are all looking forward to a better 2019.

Drive safely and enjoy the festive season!

 

Kind regards,

 

SECURITAS – Wealth Management

























Market data provided by I-Net | News article provided by Securitas with 4D Wealth

Fanie Wasserman, B. Com (Hons)(UJ), PDFP (UOVS), CFP®fanie@securitas.co.za
Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za
Albert van der LindeB. Com (US), B. Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za
Hannes Bresler, CFP®, B. Com (Hons)(UJ), Pr. Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za
Michelle Kleinhans, 082 850 3092, michelle.kleinhans@securitas.co.za