Market review

For the second quarter of 2021 (Q2-21), the JSE All Share Index was flat (0.0%) in rands. The FTSE/JSE Capped Shareholder Weighted All Share Index returned 0.6% over the last three months and the one-year return is still a very healthy 27.6%, coming off the low base of a year ago. The domestic-focused financial sector delivered strong returns (8.2%), relative to a flat return from industrials (0.8%) and weaker performance from resources.

The stronger-than-expected domestic economy and, especially, the profitability of the mining sector will boost tax revenues for government, bringing some welcome relief to the precarious fiscal situation. This improved outlook was reflected in declining yields on government bonds, leading to a strong 6.9% performance for the All Bond Index over the quarter and 13.7% over the past year. The rand strengthened by 3.5% against the US dollar.

Good returns from global equity markets continued with the MSCI All Country World Index up by 7.4% for Q2-21, resulting in a 12-month return of 39.3%. This brings the recovery from the Covid-19 lows in March last year to approximately 90%. Developed market equities (MSCI World Index +7.7%) outperformed emerging markets (MSCI Emerging Markets +5.0%), as the benefits of more rapid vaccine rollouts allowed for a faster re-opening of economic activity.

Notable emerging market underperformers included Chile and Peru, where markets reacted to an expected shift to the left in economic policy. Vaccine rollout in these markets has generally lagged developed market peers. The emergence of the Delta variant in India highlighted the vaccine gap. Widespread vaccination is critical in slowing the spread of the virus and reducing the threat of further mutations. In South Africa (SA), too, vaccination has been off to a slow start. To date, c. four million South Africans have been vaccinated, which was insufficient to avoid the current third wave and another round of restrictions being placed on the economy.

For Q2-21, the Barclays Global Aggregate Bond Index rose 1.3%, recovering some of its first-quarter selloff.

All local returns are quoted in rands and all international returns are quoted in US dollars.

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