Generally speaking, given everything going on in the world at the moment, markets were relatively stable during August. All the more surprising considering amongst others, the fractious US Presidential election campaign nearing its conclusion, the drawn out aftermath of Brexit, China’s economic slowdown perhaps reaching its nadir, possible conflict in the South China Sea, new worries concerning North Korea, Africa’s struggling economies due to the low oil price and not least, of course, our own uncertainty over the future of the Finance Minister.
Despite all this, the MSCI World Index gained 1% in USD, the JSE All Share was 2% positive, the US Dow slightly positive, and the UK FTSE up 1.5%.
A notable exception to this general stability was the local currency with the Rand depreciating some 6% against the USD mainly due to the aforementioned uncertainty concerning the Treasury but also due to USD strength with the prospect of a rise in US interest rates before the end of the year still very much on the cards.
The SA listed property index was another exception, dropping some 5% during the month mainly on the back of higher long bond yields. The latter trend is due to the weaker currency, the prospect of higher interest rates and higher inflation.
Volatility can be expected to continue with no clear and lasting trend establishing itself. Swings, up and down, are still more likely to be determined on the pronouncements of central bankers rather than actual events. That can change of course.
The need for a well-diversified investment portfolio is as important as ever it was.