Local Markets
February was shaped by geopolitical uncertainty and shifting policy landscapes. South African equities ended flat, while bonds had a mixed performance. U.S. market weakness (-1.3% S&P 500, -3.9% Nasdaq) weighed on global sentiment, though emerging markets (+0.5% MSCI EM) outperformed slightly. European equities saw gains, driven by financial sector strength. Falling U.S. Treasury yields (-33bps, 10-year) signalled economic concerns, impacting global monetary policy. The rand remained stable amid a weaker dollar.
South African Asset Performance
- Equities: FTSE/JSE All Share Index was unchanged. Prosus (+11.6%) and Naspers (+12.3%) outperformed, while resources (-6.2%) dragged the index.
- Bonds: Yields rose for the third month, reflecting fiscal concerns. Inflation-linked bonds (+1.0%) benefited from VAT hike expectations.
- Property: Continued declines (-2.6%), though Growthpoint (+6.1%) and Fairvest (+4.4%) gained.
- Currency: The rand remained stable (-0.2%) against the dollar.
Economic Outlook & Policy
Inflation rose to 3.2% due to fuel price increases, while real interest rates remained positive, keeping the door open for SARB rate cuts. The delayed national budget created short-term uncertainty, with VAT hikes unlikely in their current form. Economic growth remains subdued, with Q4 GDP expected below 0.9%.
Key Risks & Opportunities
- Power cuts returned, though government assures progress on energy security.
- U.S. scrutiny on South Africa’s stance on global issues may impact trade, but European leaders reaffirmed partnerships.
- Improved FATF compliance raises hopes of SA exiting the grey list by October 2025.
Global Markets
February saw a shift from growth to value stocks amid U.S. economic uncertainty. Developed markets struggled (-0.7%), while emerging markets (+0.5%) and European equities (+3.4%) outperformed. Falling Treasury yields (-1.4%) stabilised bond markets, with U.S. and emerging market debt benefiting.
Key Market Moves
- Equities: European stocks led gains (+3.4%), while Chinese technology stocks surged (+11.7%). U.S. equities lagged, weighed by tech valuations.
- Bonds: All fixed-income categories gained, with Treasuries (+2.2%) leading. European bond performance was more muted due to growth optimism.
- Commodities: Cold weather drove U.S. natural gas prices higher, offsetting weaker gold prices.
Looking Ahead
Investors remain cautious amid U.S. policy uncertainty and economic vulnerabilities. Diversification remains key, with European and Chinese equities showing resilience and bonds proving effective in balancing portfolio risks.
Read more below in the Market Watch for February.
Missed last month and need to catch up? Read the January market watch here.
