Global News:
- The global developed market MSCI World Index, has returned to its previous all-time high from May 2015. So far in 2017 the index has returned 3%, in US dollar terms, and it is up 22.8% from its low on 11 February last year.
- In the US, the MSCI USA Index is at an all-time record high, up 10% since November 2016, and 26% from its February low. It is the only one of the big developed markets (comprising 50% of the World Index) to be experiencing a record high.
- President Donald Trump has unleashed havoc in America by initiating a 90-day immigration ban on seven predominantly Muslim countries in the Middle East – this is becoming known as a Muslim ban.
- In Europe, the MSCI Europe Index, which includes the UK, is up 9.5% in dollar terms since its November low. This is at its highest level since April 2016 – but this is the same level as it was in January 2000!
- The MSCI Japan Index is up 26.3%, in US dollar terms, since its 11 February 2016 low. This index is -3.3% below its 2015 high, -15% from its 2016 high, -18% below its 2000 high and -32.5% below its 1989 all-time record high!
- The MSCI Emerging Market Index, is up 6.2% in dollar terms in 2017, almost double the return of the developed market index, but it is trading at the same level as 10 years ago. It is also -27.5% from the record high it saw in 2007.
Local News:
- President Zuma’s state of the nation address is on 9 February 2017. There are reported rumours of a cabinet reshuffle, and the possible replacement of Minister of Finance, Pravin Gordhan, with ex-Eskom chief, Brian Molefe. If this does happen we can expect the rand to blow out.
- Markets responded sensitively to such rumours for example: Bond yields spiked on the news and are currently trading at 8.9%, higher than recent weeks. This is still well below the highs seen during similar periods of political uncertainty in 2016.
- At the MPC meeting last week, the South African Reserve Bank (SARB) decided to leave the repo rate unchanged at 7%, as expected.
- The JSE All Share Index is trading at similar levels to the MSCI Emerging Market Index, it is also trading at similar levels from almost 10 years ago (April 2007) in USD.
