Monthly Market Commentary – April 2021

Monthly Market Commentary – April 2021

South African Property comfortably outperformed all other asset classes for the month with global property the second-best performer. Property was buoyed by global yields falling back slightly and positive economic data providing a strong tailwind to a pro-cyclical asset class. The rand strengthened over the month which tempered returns of global asset classes when viewed in rands. South African bonds also had a reasonably good month with positive data supporting a “better than expected” scenario for government finances resulting in reductions in issuances by Treasury. Local equities produced mediocre performance with Resources again the best performing sector. Interestingly, lower liquidity small-cap stocks performed strongly over the month and have meaningfully outperformed the large-cap segment over the last year.

April was another good month for most economies on the data front, with some very notable exceptions in Japan and India. Bond yields, that had risen in prior months on the back of inflation expectations, started to fade a little. And following several stronger months, cheaper ‘value’ companies underperformed their growth counterparts. Finally, sustainability returned to the forefront of investors’ minds as the UK, US, and China all announced larger and faster reductions of carbon emissions relative to their previous commitments.


SA Drivers


Inflation | Importance Medium

Inflation figures remained subdued in March with a reading of 3.2%. This was lower than expected but slightly higher than February’s reading of 2.9%. PPI came in at 5.2% for March suggesting higher prices at producers and factories that could be passed onto consumers. That said, the consensus is that there are very few demand-pull pressures on inflation suggesting that the passing on of cost increases to consumers will be muted.

Public Sector Wages and Retail Sales Rise | Importance High

Wage negotiations weigh on investors’ minds serving as a bellwether for governments ability to rein in governments debt trajectory. Negotiations have been tense and remain unresolved. Retail sales rose 6.9% for the month of February, surprising on the upside. This ended a 10-month losing streak and was supported by the end of the alcohol ban and a reprieve in covid infections.

Pfizer Vaccine | Importance High

South Africa has signed an agreement to buy 20 million doses of the Pfizer-BioNTech dual-shot COVID-19 vaccine boosting plans to ramp up vaccinations. This is on top of 31 million doses of the single-shot J&J vaccine that the government has already secured.


Asset Class Total Returns – ZAR


Global Drivers


Biden: More Stimulus | Importance High

Biden released the second portion of his economic plan which entailed $1.8 trillion in new spending and tax cuts over 10 years for workers, families and children. That’s on top of the $2.3 trillion infrastructure plan he released at the end of March. The president intends to pay for the infrastructure portion of the plan with 15 years of higher taxes on corporations and proposes raising taxes on the wealthiest Americans to pay for the Families Plan.

IMF Increases Global Growth Forecast | Importance High

The IMF expects the world economy to grow by 6% in 2021, up from its 5.5% forecast in January. The latest round of fiscal stimulus in the U.S., along with vaccine rollouts across the world, has made the organization more confident about the global economy this year. However, the organization warns of “daunting challenges” given the different rates of administering shots across the globe.

India Fights Covid Surge| Importance Medium

India’s second wave of Covid-19 grew from a worrying swell into a tidal wave. All the while India’s prime minister, Narendra Modi, was fixated on winning elections in West Bengal holding several giant rallies in the state. His apparent lack of interest in the mounting body count from the pandemic shook the whole country’s confidence in his leadership

Coinbase Listing | Importance Medium

The operator of the largest U.S. cryptocurrency exchange listed on the Nasdaq Exchange and at the close of its listing day was valued at $86bn. To many commentators, this brought legitimacy to the crypto world and at the time coincided with a strong run-up in Bitcoin. The stock has underperformed since and is trading closer to its reference point price of $250 at listing after briefly topping $400.

Commodities Rally| Importance Medium

Commodity prices have rallied strongly of late buoyed by the weak dollar, global growth upgrades and supply squeezes. Copper, which has broad uses in industry and construction, currently trades at record levels after a spectacular run-up in price over the last year. Oil continues to tick higher, as OPEC provides a confident demand outlook, feeding into inflation numbers.


Asset Class Total Returns – USD

All information provided courtesy of Portfolio Metrix – adapted and published with permission. No copyright infringement intended.


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