- In 2017, the MSCI World Index has gained 5.4% in dollar terms while the MSCI Emerging Market Index has returned 9.5%, also in dollar terms. The JSE ALSI has returned 7.8% in dollar terms, so balancing in-between the two numbers.
- In the UK, the Office for National Statistics released their 2016 GDP fourth quarter estimate of 2.8% quarter-on-quarter annualised. This is the better than the average growth over the preceding 8 quarters. Total GDP growth for the 2016 calendar year was 2%.
- In Germany, the Markit Manufacturing PMI was 57, which was better than the high expectation of 56. Services PMI was 54.4, which was also higher than expectations.
- In France, Composite PMI also did well, coming in at 56.2.
- The US 10-year yield is down from a high of 2.59% on 15th December to 2.33% today, while the German 10-year has plummeted from a high of 0.49% on 26th January to 0.18% today, so bond prices have been rising quite nicely of late, especially the German ones.
- The crucial news from the week was based on the Budget Review announced by the National Treasury, 22 February 2017.
- Due to an unexpected revenue shortfall in the 2016/2017 financial year (tax revenue massively underperformed budget by an estimated R30 billion) and a reduced budget deficit, the Treasury announced policy changes to raise an additional R28 billion for the upcoming year.
- The bulk of these funds will come from personal income tax, higher dividend tax, and higher excise levies on fuel.
- Debt servicing costs continue to rise at a very rapid pace – While South Africa’s public sector debt parameters remain fairly acceptable by world standards at around 50% of GDP, the total debt, as well as the cost of servicing that debt, is clearly on the rise.
- In 2017: The All Bond Index and JSE Listed Property Index are at the same level, gaining 2.7%; the ALSI has returned 1.98%; and cash 1.08%, all in rand terms.
- The JSE Mining Index has lost 13% since its high on, 24 January 2017.
- Rand strength is affecting the performance of the JSE ALSI. The JSE ASLI has lost 3.1% since its recent high on, 26 January 2017. The influence of the rand on the JSE ALSI is confirmed by the fact that the JSE has only gained 1.98% in 2017 in rand terms, whereas in US dollars the JSE ALSI has returned 7.8%.
Source: Dynasty, Stanlib, Efficient Select, Prescient, Moneyweb & Bloomberg Markets etc.