July 2023 Update

Making The News

Global equity markets continue to rally into the second half of the year (MSCI World +3.4% MoM/+19% YTD) as US inflation cools to a 26-month low of 3%. Although the US CPI has continued to fall for 12 consecutive months, the inflation figure remains above target (2%), prompting the Fed to raise interest rates a 22-year high of 5.5%. Following the news of falling inflation and better-than-expected Q2 GDP results, the US consumer sentiment ticked up from 64.4 to 71.6.

Mega cap stocks continue to drive equity market returns, highlighted by Alphabet, Amazon, Apple and Netflix reporting Dollar gains of 40% to 60% YTD. Additionally, Tesla and Nvidia also delivered standout dollar returns of +111.9% and 220% respectively YTD. Contrasting the performance of the MSCI ACWI index (+18%) to the equal weighted MSCI ACWI Index (+10%) YTD, underlines the significant outperformance of mega cap stocks compared to the rest of the equity universe.

The Chinese economy was plagued by another disappointing month as youth unemployment hit a record high of 20.8% and the PPI (-5.4%) fell to the lowest level since 2015. Hampered by the domestic property sector and weak external demand, the country’s economic performance slowed to 0.8% QoQ in Q2. The economy’s slowing momentum is underlined by shrinking Chinese exports and imports, falling by 6.8% and 12.4% respectively.  Overall, Emerging markets (EMs) have underperformed developed markets (DMs) by 7.6% YTD, however Emerging Markets remain in positive territory (MSCI EM ZAR +11.4% YTD).

July proved to be a promising month domestically, as South Africa enjoyed a 0.9% decrease in inflation, and the Rand strengthened to R17.27 against the Dollar. While loadshedding remains a problem, promisingly, the maximum capacity of rooftop solar has alleviated loadshedding concerns somewhat, following a 95% since July 2022, increasing the MWp to 4411.4.