Monthly Market Update – 04/2021
South Africa continued with phase one of the COVID-19 vaccination program in April, with nearly 330 000 health workers vaccinated by month end, out of a total of 1.2 million targeted. With ‘COVID fatigue’ and the potential of a new variant posing a threat to the rate of infection, concerns around a possible third wave remain.
The local equity market was held back in April by index heavy weights, such as Naspers (-6.3%) after Prosus announced plans to sell 2% of its stake in Chinese tech giant Tencent, which will reduce its share from 30.9% to 28.9%. After another stellar month in April, the local property index is now up 60% since November, although still around 40% below its late 2017 highs.
On the economic front, South Africa’s trade surplus widened to R52.77bn in March compared to February’s revised R31.22bn surplus, beating market forecasts of R25bn. Most commodities enjoyed a great month during April. Palladium was the biggest winner, gaining 13.56% to all-time new highs.
April saw a much more positive picture emerge on the global economic outlook. Monetary and fiscal policy remain highly accommodative, and consumers are gradually becoming more confident. US GDP growth accelerated to 6.4% quarter-on-quarter annualised in the first quarter of 2021, driven by a sizeable 10.7% jump in consumption. This was above market expectations of a 6.1%.
Investors grew even more concerned about possible rising inflation after President Biden put forward an additional US$1.8trn programme at the end of April, aimed at providing support for children and families. This comes less than a month after Biden issued a US$2trn infrastructure proposal. The Biden administration proposes to pay for these packages over 15 years by hiking taxes of both high-net-worth Americans as well as corporates.
Developed market equities outperformed emerging market equities for the month with emerging Europe the weakest performer and Latin American equities the best performing region in the developing world.
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