By browsing our website, you accept the use of cookies. Our use of cookies is explained in our privacy policy.
Click the PRODUCTS & SERVICES button on the left to expand it again.
Ok. Got itThe Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) kept the bank’s key lending rate on hold at 8,25%, with a unanimous vote.
Lending support
Mining and manufacturing data for September confirmed quarterly declines for both sectors, while retail sales expanded over the quarter. This leaves the outlook for third quarter GDP mixed, with official data to be released in early December. The Medium-Term Budget Policy Statement (MTBPS) highlighted weaker fiscal metrics, a result of reduced revenues given lower commodity prices and weak economic growth, in addition to expenditure pressures. While policy makers did a commendable job to demonstrate fiscal prudence, debt levels are projected higher, and the challenges remain meaningful. High debt service costs remain a constraint, while further SOE support seems likely. While no support was extended to Transnet in the MTBPS, challenges (financial and operational) have escalated to crisis levels as demonstrated by gridlock at national ports. In early December, National Treasury announced a R47bn guaranteed facility for Transnet, with a portion made available immediately to help facilitate near term debt commitments. While this will help in the near term, it is unlikely to be the full extent of support required.
Headline inflation for the year to October 2023 increased to 5,9% from 5,4% the previous month, exceeding market expectations. Core inflation printed at a lower 4,4%. While an increase in fuel prices was the most significant contributor to the monthly increase, food inflation also trended higher to 8,8% y-o-y with prices for eggs and potatoes showing meaningful increases.
Producer inflation for September also trended higher to 5,8% from a figure of 5,1% the prior month. The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) kept the bank’s key lending rate on hold at 8,25%, with a unanimous vote. The accompanying statement highlighted the serious risks that remain to the inflation outlook. Even so, global central bank rhetoric and the hold saw markets price the local interest rate cutting cycle with a higher probability.
Domestic assets rallied alongside global equity and bond markets and risk on sentiment returned. Local bond markets benefitted from lower global bond yields and a restrained MTBPS outcome, which saw S&P Global Ratings leave the country’s credit rating and outlook unchanged. The FTSE/JSE All Bond Index gained 4,7% in November. The Rand depreciated by 1,1% against the US dollar, bringing the depreciation year to date to 10,9%.
Local equity markets ended the month in the green, with the FTSE/JSE All Share returning 8,6% with gains across resources (5,9%), industrials (10,5%) and financials (8,7%). Monthly returns from index bellwethers, Naspers (19,4%) and Prosus (19,7%) mirrored gains from Chinese technology company Tencent (13,1%) with an added boost from constructive financial results.
While large capitalisation stocks led the way, mid (5,3%) and small cap stocks (4,8%) also benefited from improved market sentiment. The prospect of lower interest rates helped the property sector (9,1%) rally alongside other interest rate sensitive assets, improving the returns year to date to 0,2%.
Want to know more?
Here's what to do:
Disclaimer |
Nedgroup Private Wealth (Pty) Ltd and its subsidiaries (Nedbank Private Wealth) issued this communication. Nedgroup Private Wealth is a subsidiary of Nedbank Group Limited, the holding company of Nedbank Limited. ‘Subsidiary’ and ‘holding company’ have the same meanings as in the Companies Act, 71 of 2008, and include foreign entities registered in terms of the act. There is an inherent risk in investing in any financial product. The information in this communication, including opinions, calculations, projections, monetary values and interest rates, are guidelines or estimations and for illustration purposes only. Nedbank Private Wealth is not offering or inviting anyone to conclude transactions and has no obligation to update the information in this communication. While every effort has been made to ensure the accuracy of the information, Nedbank Private Wealth and its employees, directors and agents accept no liability, whether direct, indirect or consequential, arising from any reliance on this information or from any action taken or transaction concluded as a result. Subsequent transactions are subject to the relevant terms and conditions, and all risks, including tax risk, lie with you. Nedbank Private Wealth recommends that, before concluding transactions, you obtain tax, accounting, financial and legal advice. Nedbank Private Wealth includes the following entities:
|
Get an income, grow and protect your wealth with our Nedbank Private Wealth investment products and services.
We connect you to so much more than great advice. We provide insights, technical expertise, global opportunities, and a wide range of solutions and services.
Get an income, grow and protect your wealth with our Nedbank Private Wealth investment products and services.
We connect you to so much more than great advice. We provide insights, technical expertise, global opportunities, and a wide range of solutions and services.