GTC WM Trendline – December 2015
Global – Oil on a slippery slope?
Global equity markets delivered positive returns in the fourth quarter despite a relatively poor performance in the latter half of December. In Dollar terms the MSCI World Index returned 5.11% with the MSCI Emerging Markets Index coming under considerable pressure returning a paltry 0.26%.
Local – Interest rate rise?
Indicative of developments in emerging market economies the MSCI Emerging Market Index surprisingly showed a positive return of 0.26% for the quarter but lagged significantly behind the MSCI World Index. A stronger U.S. Dollar together with renewed concerns over the Chinese economy provided significant headwinds.
However of more significance for the South African market was the totally unexpected move on the part of President Zuma who dismissed the well thought of Minister of Finance Nhlanhla Nene and replaced him with a relatively unknown and inexperienced David van Rooyen. This move sent the Rand into a nosedive and wiped billions of Rands in value off the stock market with banking counters being the hardest hit. Reaction was swift and President Zuma almost immediately announced the return to office of former Minister of Finance Pravin Gordhan. The move helped to calm the local markets but continuing negative economic numbers coming from China saw resource stocks under renewed pressure and market volatility increasing measurably.
