Market Watch for March 2024

South African Equity Market Outperforms in March, But Local Bonds Struggle

Despite a challenging global environment, the South African equity market displayed resilience in March, outperforming its emerging market peers. Here’s a breakdown of the key market movements:

Equity Market Uptick:

  • The FTSE/JSE Capped SWIX Index gained 2.9% in March, recovering some year-to-date losses.
  • However, the index remains down 2.3% for the first quarter of 2024.

Global Markets Continue to Rally:

  • Major economies surprised with stronger performance, leading to a fifth consecutive month of gains for global equities.
  • This marks the fourth-best opening quarter for global equities in the past 30 years.

Inflation Concerns in South Africa:

  • Local inflation data exceeded expectations, with core inflation reaching 5% year-on-year.
  • This, along with fiscal worries and upcoming elections, triggered foreign capital outflow from the South African bond market.

Bond Market Under Pressure:

  • SA bonds suffered a second month of negative returns (2.0%) in March.
  • The 10-year yield spiked significantly by 61 basis points.

Central Bank Holds Rate, Maintains Hawkish Stance:

  • The South African Reserve Bank (SARB) kept the repo rate unchanged at 8.25%.
  • Despite tempered inflation forecasts, SARB remained cautious due to potential risks and high core inflation.
  • The bank revised its inflation target timeline, pushing the expected return to 4.5% to late 2025.
  • Consequently, the number of projected rate cuts for 2024 was reduced from three to two.

Overall, the South African market presented a mixed picture in March. While equities showed some strength, rising inflation and the central bank’s hawkish stance weighed on the bond market.

To find out more about the current market situation, read the Market Watch for March 2024 below:

Missed last month and need to catch up? Read the February market watch here.