EB Market Update – January 2016
Global – Mario Draghi more QE?
Global equities came under considerable pressure in February on the back of continued weakness in the oil price and uncertainty regarding the way forward in terms of U.S. interest rate normalization. In Dollar terms the MSCI World Index delivered a negative return of -0.96% while the MSCI Emerging Markets Index eased -0.15%. Having experienced a difficult month in January, U.S. markets displayed some resilience in February but struggled to make meaningful progress as concerns over the domestic economy were compounded by a further slowing of the global economy
Domestic – Pravin’s dilemma
The release of the 2016/17 budget, concerns over U.S. and global economic growth, together with the possibility of a downgrade of our sovereign debt by the rating agencies all contributed to a month of relentless volatility on the JSE. This is evidenced by the fact that the ALSI 30 day volatility indicator increased from 21.37 to 24.07. Surprisingly taking into account the barrage of mostly negative domestic economic data the JSE/ALSI ended the month in positive territory gaining 0.59%. This was in spite of foreign sales of R10.4 billion of equities over the month.
