August 2025 Update
Making The News
1.Strong DM performance
Developed market equities continued their climb in August, with the MSCI World Index gaining +2.6% (+14% YTD). Sector performance was led by a notable healthcare rebound (+5.4% MoM), fuelled by United Healthcare’s surge (+24% MoM) on news of a major Berkshire Hathaway investment. US small-caps also showed strength, with the Russell 2000 up 7%. The rally unfolded alongside softening macroeconomic data, as weaker-than-expected US labour market reports pulled average job gains down to just 35,000 per month. This slowdown drove US 10-year yields lower to 4.2%, further pressured the US dollar (DXY Index -10% YTD), and bolstered gold (+4.8% MoM).
- Emerging Market miss
Emerging market stocks modestly underperformed their DM peers in August (MSCI EM +1.3%) but still extended their perfect record of positive monthly returns in 2025, bringing its year-to-date gain to +19.0%. The strength was again driven by China, where equities rallied on government efforts to promote local chip production and rising hopes for new stimulus. The Shanghai Composite jumped +9.0% and the CSI 300 surged +11.4% for the month. However, this robust performance masks underlying weakness: consumer sentiment remains severely depressed by a troubled housing market, and the manufacturing PMI has contracted for five consecutive months.
- JSE Rally and retreat
South African equities delivered a sixth straight month of gains (FTSE/JSE Capped SWIX +3.5% MoM / +22.3% YTD). The advance was powered by gold miners (+22% MoM), which alone contributed three-quarters of the month’s return. Together with platinum shares, they account for over half of the JSE’s year-to-date performance. The rand also strengthened (+2.1% MoM) against a weak US dollar. In a contrasting domestic macro move, headline inflation rose to +3.5% YoY—a near one-year high—driven by food price spikes linked to foot-and-mouth disease disruptions. Core inflation edged up to +3.0% YoY. Despite this, the government’s 10-year borrowing rate fell slightly to 9.6%, benefitting from lower global yields.
- SARB Policy Shifts
European markets stumbled in late August amid growing political uncertainty, headlined by a no-confidence vote in France over government spending cuts. Germany’s DAX retreated -0.7% MoM (+20.1% YTD) and France’s CAC 40 fell -0.9% (+4.4% YTD). The sell-off occurred despite a stable macroeconomic backdrop, with eurozone headline inflation holding steady at the ECB’s 2.0% target.
