The Year 2019
In contemplating the past year, we looked back at our comments over the past few years.
In South Africa, we were bombarded by a flow of poor economic and political news, in addition to load shedding. Our JSE All Share index grew by 3%. Good growth in industrials and financials of 16% and 9% has been offset by a fall in resources of 35%.
It started locally a year ago with Nenegate, followed by a great deal of political noise, not helped by the drought, the economic downturn and the risk of ratings downgrades. Who could have imagined…. Brexit and more recently the Trump victory?
Even if Mr. Ramaphosa does get the job, he will have a monumental struggle to haul the country out of the hole dug by his predecessor and the state-owned enterprises, which have been burning money at record levels. This will require strong, decisive leadership…….and the urgent need to restore business confidence.
The year started off with a sense of great optimism following the election of President Cyril Ramaphosa, but we were soon faced with the understanding that the task ahead was going to be much greater and slower to deliver, given the extent of the rot of State Capture. On the world stage we were faced with Donald Trump’s unpredictability which has harmed world trade and emerging markets in particular.
What of the year past?
Locally, year-to-date investment growth in industrials and resources of 6% and 19% has been offset by financials of -3.7%, giving an overall result of 8.5% to the end of November. The share market performed better than cash and still has growth potential in the time ahead. The USA and European share markets have returned over 20%, while the UK has grown by 9% and China (Hong Kong) by 2%.
There has been considerable impatience at the slow pace of rehabilitation of our society and economy after the looting and corruption of the past decade, but it does seem as if green shoots are starting to appear. We think of actual fixed investment growth, recent NPA activity, the tackling of the SAA problem, focus on Eskom. We trust that the Zondo commission will soon start creating lots of work for the Hawks and NPA.
Investors are still despondent, but we need to remember that there is no “starting gun” to the turn in the economic and market cycle. Rather, the groundswell of sentiment develops until one day we look back at positive results in the market.
In the meantime, best wishes for the summer holiday season and the year 2020, from the team at Ascent Wealth Management.
Thank you for trusting our advice and support in these challenging times.