MARKET COMMENTARY
The month of September saw the Russian Market fall by
-5.60%, due to Russia’s involvement in the Syrian crisis.
This was further intensified as increased Financial and
Trade sanctions resulted in the halting of key economic
development projects. The German Dax closed the month
YEAR TO DATE: 30 SEPTEMBER 2015
in red, stemming from a sharp fall in industrial orders
SA
scandal. Although down for September, Chinese markets
PROPERTY • 13.26% BONDS
ended the month firmer
INDIA
• -4.89% RUSSIA
• 17.34%
CHINA
• -11.69% BRAZIL
• -7.12%
largely due to government’s
effort to stimulate the economy. Despite the JSE closing
firmer,following
gains made by the Financial and
Industrial Sector, the Rand is yet to recover amid US rate
hike uncertainty and the widening SA trade deficit.
• 3.39%
CASH
• 4.843%
which was further exacerbated by VW’s recent emission
• 2.68%
INDONESIA • -19.19% GERMANY • -1.48%
LONDON
• -2.86% USA
• -8.63%
INVESTING
urr1IN SOUTH AFRICA: HAVE WE BEATEN OUR AMERICAN COUNTERPARTS? IN THEIR OWN CURRENCY?
The recent downturn in South African markets, as well the record lows for the Rand, have investors seeking alternatives offshore.This newsletter seeks to provide you the investor with insight as to how the
South African market has faired against its developed counterparts , over the long term (over the past past 20 years).
Graph 1: JSE vs THE S&P 500 vs CASH (30/06/1995 – 30/09/2015)
Performance shown in US Dollars
Graph 2: MSCI World Index vs JSE (01/09/2010-30/09/2015)
Performance shown in US Dollars
Source: Moneymate
Source: Moneymate
JSE
(US$)
SA Money Market ((US$)
MSCI World Index (US$)
JSE (US$)
S&P 500 (US$)
The above graph demonstrates that over the past 20 years the JSE has in US$ terms,
outperformed S&P 500. Only investors who had their money in a local money market or
interest bearing bank account would have been worse off than their American counterparts.
Although the JSE performed quite well over the past 20 years, the trend over the past 5 years
has shown that local markets are expensive and are more susceptible to market downturns
when compared to the developed world.
VERDICT:
The average South African investor , who has invested in market related SA portfolios in the last 20 years , has no reason to complain , even after the current fallout of the
RAND . An American who simply invested a lump sum of US$ 100 000 in the S&P 500 in 1995 , would look at his investment statement and see that it has grown to
US $ 347 043.15 as at 30/09/2015. His South African cousin , who invested R 433 700 in the JSE in 1995 ( US$ 100 000 in 1995 ) would look at his statement as at 30/09/2015
and see R 5 999 362.32, which even at R 13.82/ US$1 is US $ 434 107.26.
It is human to remember and feel passionately about what is the most recent experience – i.e Rand depreciation , but let us not forget what South Africa has delivered over
the long term.
The strong long term returns , even in US$ , of the JSE is undeniable , and something every South African investor must be appreciative of. The recent trend might be reversing
though, and thus any wise investor whilst being grateful to how his portfolios have done in SA , should seek to diversify into international markets – as it may be prudent to
bank some of the long term gains experienced in SA.
Viren B. Garach