We are pleased to release the June 2022 edition of the RisCura – SAVCA South African Private Equity Performance Report. This report tracks the performance of a representative basket of…
Global Market Themes: US Federal Reserve likely to hike rates by 25bps in March. Chinese markets close lower; rely on domestic consumer to spur growth. Broader markets experience knock-on effects from US interest rate revision. Bank of England expects inflation to fall to 4% by year-end. SA Market Themes: SA markets down for the month. Rand depreciates against all major currencies. Finance Minister Enoch Godongwana outlines greylisting path in the Budget speech. Government pledges to take on R254 billion of Eskom’s debt.
Here are this month’s highlights: In just two years, the MSCI India Index’s weighting to Adani companies increased from 1.2% to 5.8% in aggregate, despite many people’s concerns of poor governance. A key question that arises as a consequence of this saga is whether the “E” (within ESG) was so compelling that the “G” could be compromised. By Western standards, one of the main reasons for the poor governance in emerging markets is due to the presence of a controlling shareholder – usually the founder and their family, or the state. Private enterprises run the risk of being managed for the benefit of the majority shareholder and not stakeholders in general, which in its extreme could lead to fraud. In the private sector, we all know how much value a visionary leader, usually the founder and controlling shareholder of the business, can create over time by focusing on the strategic plans rather than quarter-over-quarter financial results – think of the founders of the great internet companies. While it is not always black or white, we argue that fund managers should always be careful when taking on poor governance as the results could be binary – all or nothing.
Global Market Themes: Pace of US Fed interest rate hikes slowing down. Global markets rally off a low base, led by China. China economy reopens along with pro-growth policy, ushering in risk-on sentiment. Natural gas prices fall further following a mild winter. SA Market Themes: JSE All Share rallies 8.9% along with emerging markets. CPI reading for December 2022 prints in at 7.2%. SARB increases Repo rate by a further 25bps. Rand depreciates 2.4% against the Dollar due to worsening loadshedding conditions.
Here are this month’s highlights: It was truly remarkable to see how market sentiment went from panic to optimism in just a few weeks. When market volatility subsides and investors’ focus shifts back to fundamentals, stock selection will be a key driver for returns.
Global Market Themes: Central Banks continue their fight against inflation and global growth continues to slow Chinese economic reopening buoys Chinese equities despite unclear path ahead New UK Prime Minister helps stabilise UK markets Bank of Japan surprises markets with overnight monetary policy change SA Market Themes: Local markets follow global markets lower Return to Stage 6 loadshedding CPI inflation hits a five-month low of 7.4% but remains stubbornly high
Here are this month’s highlights: The direction of Covid policy is now very clear, and a full reopening scenario is upon us. The government has stepped in to provide support to the all-important property sector. We think China is poised for a positive 2023.
Global Market Themes: US CPI Inflation surprises to the downside, catalysing a risk-on rally Federal Reserve likely to slow pace of interest rate increase going forward China reopening narrative boosts global risk appetite Economic growth continues to slow in Europe and the United Kingdom SA Market Themes: Risk appetite returns, catalysing a strong month for equities Annual inflation remains elevated, trending sideways in the mid-7% range Manufacturing activity appears resilient to ongoing loadshedding
Here are this month’s highlights: The recent Covid-related protests in multiple cities suggest that volatility will persist in the near term. China has more STEM graduates than India, the US, Russia, Iran, Indonesia and Japan combined. It is perhaps no surprise that China has the most unicorns (start-ups that are worth more than USD1bn) in the world after the US.
