Economic and market snapshot for September 2018
In Momentum Investments’ view, an acceleration in structural reforms is imperative to resolve the country’s stark inequality problem.
2017 was characterised by a perfect ‘goldilocks’ combination of improving global growth, low inflation and accommodative monetary policies, which led to robust returns from risky investments, while volatility remained close to all-time lows.
South Africa: Market-friendly outcome, but a cross-slate top six could compromise a number of issues, which need to be addressed as a matter of urgency to favourably shift SA’s macroeconomic fortunes.
Momentum Investments continues to manage its portfolios in the best interests of its clients, and believes this incident provides further confirmation of the company’s well-formulated and managed outcome-based investing philosophy.
Global equity markets experienced a month of two halves. International bourses tracked largely sideways during the first half of the month, but extended its gains in the second half.
Fitch leaves South Africa’s (SA) rating unchanged. Moody’s rating kept steady, but country placed on review for downgrade. Standard and Poor’s (S&P) lowers SA’s foreign and local currency ratings by one notch.
Highly uncertain environment and balance of risks keep interest rates unchanged at 6.75%
Highly uncertain environment and balance of risks keep interest rates unchanged at 6.75%
Majority of the items in the inflation basket are tracking below 6%, but fiscal deterioration and vulnerability to further rating downgrades reduce chances of interest rate easing for now.
South Africa is missing out on the global economic recovery. The SA Reserve Bank calculates a strong relationship between global and domestic growth historically.
Budget negative for bonds and the currency, but equities rallied post the announcement