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Market Commentary: March 2023

Global Market Themes: Sticky inflation compels the US Fed to hike interest rates by 25bps. Banking crisis, sparked by SVB collapse, forces government to step in. Lending conditions tighten, displaying further signals that the US economy is slowing down. China and EM markets remain buoyant, with the MSCI China Index up 4.5% along with an upbeat Manufacturing PMI of 51.9. SA Market Themes: SARB surprises the market with a 50bps interest rate hike. Rand appreciates 3.3% against the greenback. Loadshedding continues to constrain the economy, while South African PMI prints 48.1. Shoprite plans to open 400 new stores along with its first apparel outlet.

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Market Commentary: February 2023

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.

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China Market Commentary: February 2023

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.

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Market Commentary: January 2023

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.

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China Market Commentary: January 2023

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.

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Market Commentary: December 2022

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

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China Market Commentary: December 2022

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.

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