2019/05/28 00:00:00

Global equity and bond markets were broadly positive in March, buoyed by the US Federal Reserve’s easier interest rate stance - the Fed left the benchmark interest rate within the 2.25% - 2.5% range, indicating that no further rate hikes were likely for the remainder of 2019, while forecasting just one rate hike in 2020. Developed markets outperformed emerging markets, shrugging off concerns over a contraction in global growth and political uncertainty in Europe. In the US, Fed Chair Jerome Powell noted that a slowdown in the European and Chinese economies could have a positive but lagged effect on US growth through downward pressure on future inflation. In the UK, Prime Minister Theresa May had a third vote on her Brexit proposal rejected by Parliament. Parliament also voted down eight separate proposals on the structure for exit, creating even more uncertainty. The EU has given Britain until 12 April 2019 to formalise its exit strategy. In Europe, political turmoil in Turkey and uncertainty around Brexit dominated headlines; however, news that the European Central bank would implement a new cheap loan programme for banks to stimulate economic activity within the region helped bolster investor sentiment.
In South Africa, the South African Reserve Bank (SARB) announced that it would keep interest rates unchanged at 6.75%, in line with market expectations. GDP for 2018 came in at 0.8% (y/y), slightly higher than expected; however the SARB indicated that this may be revised down to 0.7% (y/y). The SARB also lowered its growth forecast for 2019 from 1.7% to 1.3% and from 2.0% to 1.8% for 2020. The FTSE/JSE All Share Index returned 1.6% in March, with Resources increasing by 4.7% and Industrials by 2.9%, due largely to their global exposure. Financials were the biggest loser in March, having declined by -4.0%, while Listed Property lost -1.5%.
Among the largest relative contributors to performance for the month were overweight positions in BAT and MultiChoice, and an underweight position in Aspen Pharmacare. Among the main detractors from value were overweight positions in ABSA, Investec and Sappi.