We all felt the pressure in 2019, but we need to look at what happened in 2019 and what were the main drivers behind the performance of the All Share and did it perform better than 2018?
The first thing we need to look at is where is South Africa positioned in the global Economy. We are rated and scrutinized among the developing Markets such as Brazil, India, Turkey and most importantly- China. The problem with being a passenger to the second largest economy in the world is that the Trade Tensions between China and the USA affects investor confidence negatively. A weaker China means a weaker South Africa as we are immensely depended on them.
Global tensions rised in 2019 and investors started seeking for safe havens with less volatility outside of South Africa where local politics and failed SOE’s has confidence at an all-time low. South Africa’s credit rating review also affected our outlook and which in turn accelerates out-flows.
On the positive side, we did fair much better in 2019 than in 2018 despite all of these challenges. The calendar year of 2018 performed at -9% where as 2019 to date has given us 9.38%, reeling in some of the short term losses on medium- to long-term portfolios. At Bovest we are positive about the potential of the JSE All-Share and the local economy as a whole going into 2020. Given that the South African government can hold their part of the bargain and global risk appetite increases as tensions wilt. The most important thing is to stay invested and never invest with your emotions.
To see an infographic about the major events that influenced the JSE All-Share price in 2019 compiled by Cannon Asset Managers- click here.
Ruvan J Grobler