July 2017 market overview

July was a rewarding month for investors who stuck to their long-term financial plan and were willing to take on some risk in the form of exposure to local and global equities.

Globally, US GDP for the second quarter of 2017 was released, showing encouraging growth of 2.6%, spurred by consumer spending. But UK GDP reported only a modest expansion of 0.3% in Q2. US companies released strong corporate earnings and commodity prices rallied after Chinese GDP growth of 6.9% year-on-year was reported, primarily driven by robust construction, retail sales, and export data. Emerging markets, including South Africa, benefitted from the renewed ‘risk-on’ sentiment among investors.

Locally, inflation figures provided some good news with consumer inflation easing to 5.1% year-on-year for the month of June. The day after these inflation figures were released the SA Reserve Bank’s Monetary Policy Committee announced that it’s cutting interest rates by 25 basis points, the first cut in five years. On the last day of July the FTSE/JSE All Share Index touched 55 277, a level never seen before.

Emerging markets, including South Africa, were the stars of the show in July 2017. The FTSE/JSE All Share Index (ALSI) added 7.03% on a total return basis, outperforming even the MSCI Emerging Markets Index’s 6.0% in dollar terms. The All Bond Index (ALBI) gained 1.50% and the SA Listed Property Index made a strong return with 3.70%, while cash returned 0.62%. The MSCI World Index gained 2.4% in dollar terms.

What a difference a month makes. Now including July’s strong performance, for the year 2017 to date, the ALSI and listed property have returned 10.64% and 6.10% respectively. Cash has delivered 4.37%, and the ALBI has gained 5.60%. Internationally, the MSCI World Index and the MSCI Emerging Markets Index ($) have returned an exceptional 13.3% and 25.7% respectively in dollar terms.

Click here to read: Ten minutes with Jurie Strydom