Market Watch for November 2023

South African Markets Enjoy Festive Cheer as Inflation Fears Ease

South African markets experienced a welcome Santa Claus rally in December, mirroring a global recovery fuelled by easing inflation concerns. Key highlights include:

Positive Performance Across Asset Classes:

  • South African stocks: Surged 8.6%, with resources, financials, and consumer goods leading the charge.
  • South African bonds: Gained 4.7%, driven by renewed foreign investor interest in SA debt due to a shift in global rate sentiment.
  • Rate-sensitive listed property: Soared 9.0%, benefiting from the positive outlook for interest rates.

Disinflationary Signals:

  • US CPI and Core CPI: Recent declines to 3.2% and 4.0%, respectively, calmed fears of further aggressive tightening by the Fed.
  • Weaker-than-expected US job numbers: Indicated a potential easing in labor market tightness, allowing disinflationary forces to take hold.

South African Specifics:

  • Rand: Slightly depreciated against the US dollar (1%) amidst global risk-on sentiment.
  • Consumer price inflation: Rose to 5.9% in October, edging closer to the SA Reserve Bank’s target range (3% – 6%). This was driven by factors like avian flu affecting dairy and egg prices.
  • Monetary policy: The MPC maintained the key interest rate at 8.25%, in line with expectations, and anticipates inflation to decline in November.
  • Economic outlook: The Reserve Bank upgraded its GDP forecast, expecting 0.8% growth in 2023 and 1.2% in 2024.
  • Fiscal policy: National Treasury’s Medium-Term Budget Policy Statement demonstrated commitment to debt stabilization and achieving a primary surplus through expenditure restraint, exceeding market expectations.

To find out more about the current market situation, read the Market Watch for November 2023 below:

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