Investment Committee Comment

Global economic trends presented a mixed picture in the latest quarter. US economic growth slowed in the fourth quarter, but consumer spending grew over the same period. Overall, the US economy declined in 2024 relative to 2023, although by a small percentage point. Inflationary pressures persisted in key economies, with the UK inflation rate recording a 10-month high inflation rate and Japan reaching a two-year peak. This prompted the central bank to adjust the degree of monetary accommodation to avoid yen depreciation. Economic sentiment improved for the month in both the Eurozone and European Union (EU). On the domestic front, South Africa saw positive developments, with retail sales expanding both in the final quarter and over the year. Encouragingly, the unemployment rate declined across all demographics, including youth, as job creation gained momentum across multiple sectors. Developed market (DM) equities ended in negative territory for February, with the MSCI World Index at -0.72% month-on-month (m/m) in dollar terms, as risk aversion increased. Weaker-than-anticipated economic data, weak US consumer and business sentiment, and increased geopolitical uncertainty to push investors into the less risky parts of investment markets, contributed to the index’s decline. Conversely, Emerging Markets (EM) equities performed better for the month relative to DM equities, ending positively at 0.50% m/m in dollars. Global property and global bonds were both in positive territory for the month at 2.26% and 1.43% respectively in dollars. Although the FTSE Index was the biggest gainer for the previous month at 5.52%, it did not continue with the large gains into February. The index ended at 1.32% m/m in pounds. The shape of January returns continued into February with the Euro Stoxx 50 Index (3.48% m/m) which outperformed the S&P 500 (-1.30% m/m) for the second time this year. The Dow Jones Index ended the month in negative territory at -1.39% in dollar terms, along with the Nikkei at -6.05% in yen terms. SA equity markets struggled alongside global equity markets in February when FTSE/JSE All Share Index ended the month at -0.01% in rand terms. Industrials and Property were both in negative territory at -3.74% m/m and -0.29% m/m respectively. Resources posted the biggest losses for the month at -7.09%. However, Financials and Cash were both in positive territory at 0.97 m/m and 0.59% m/m respectively. The bond market was positive for short-term bonds but negative for long-term bonds with the FTSE/JSE All Bond Index ending the month positively at 0.07%. Bonds of 1-3 years were positive at 0.50% m/m along with bonds of 3-7 years at 0.28% m/m; however, bonds of 7-12 were negative at -0.03% m/m and bonds of 12 years and above at -0.12% m/m. The rand strengthened against the US dollar and euro at 0.52% m/m and 0.48% m/m respectively, but weakened against the pound at -0.80% m/m.