As the year rapidly draws to a close, we can begin to reflect on just how difficult the global investment environment has been.
On a year to date basis, world markets have generally been either flat or weak. The US Dow Jones index so far has been negative 0.90% whilst the S+P 500 has produced a modest positive return of 0.99%. The UK FTSE has been negative 3.12%. By contrast, on the back of a weaker Euro, the Frankfurt Dax has shown a creditable 10.65% appreciation. However, the Euro has depreciated against the USD by 9.02% so far this year.
Similarly the JSE All Share has shown a return of 8.08% so far but that, unfortunately only tells half the story. The local currency has depreciated against the USD by 20.52% and the GBP by 18.68%.
Despite the dramatic downturn in the Chinese stock market during this year, the return year to date has been 4.57%. The Japanese market has also been positive 9.35%.
Overall, world markets, as reflected in the MSCI World Index, have depreciated by 0.23%. Emerging markets have shown a decline of nearly 10% since the beginning of the year.
So why have we seen such weak performance? Firstly the Chinese economy has continued to slow with the demand for commodities tapering off significantly. This has badly affected commodity exporting countries such SA and Australia amongst others. Secondly, the uncertainty regarding when the US Fed will raise interest rates has already led to a flow of money out of emerging markets which remain weak as a result. Further weakness can be expected when the rates announcement actually arrives.
Against this global backdrop, our own economy is struggling to grow at anything like the rate needed to meet our requirements. A projected growth rate of over 2% has gradually been reduced to 1.5% and although we have managed so far to stave off recession, the outlook does not look that encouraging. Hopefully we can manage to avoid a credit ratings downgrade during the course of the coming months into 2016.