Market returns up to the end of May

Market returns up to the end of May

We are almost halfway through 2021, and it may be a good time to reflect on the growth in markets so far this year. Up until the end of May this year, business across the bank looked considerably better than it had a year ago when severe lockdowns still inhibited the world economy due to the COVID-19 pandemic. To illustrate, a year ago, local equities were down by more than 10% and the listed property sector in SA was down by almost 50% - and this was only for the first 5 months of 2020.

A year later, business looks significantly better, with none of the major asset classes showing negative growth for the first 5 months of 2021. In May itself, property was under pressure, and with the strengthening of the SA Rand, foreign investment in Rand terms was also negative, but the rest was positive.

I will indicate the growth in all major asset classes until the end of May this year and compare it to inflation in Namibia, which currently stands officially at 3.9% and 4.4% in South Africa. We indicate inflation specifically because only growth above inflation can be counted as real growth. Let's kick off with money market investments or cash:

Money market investments are currently under pressure, with most money market products struggling to beat inflation. 12-month treasury bills are around 4.50% and some selected bank deposits are around that too, but most other interest-bearing products are currently yielding negative real growth.
Bonds or long-term bonds performed fantastically with growth of 3.7% in May alone. So far this year, the asset class's growth stands at 3.9% and a very attractive 11.1% over the last 12 months.
Then listed property, as I mentioned earlier, was in the red in May and dropped back by 2.9% for the month. However, for 2021, the growth stands at a very fair 15.4% and remarkable 37% over the last 12 months. Excellent growth, but we need to remember property comes from a low point. Over the past 7 years, the growth is still negative, so property still has a long way to go.
Local shares were up by 2.8% for the month and now stand at a very strong 15.7% over the last 5 months. 12-month growth until the end of May was a very good 38.8% - once again, we have to remember that in May last year, the market was down, so the growth also comes from a low base.
Then foreign stocks in developed economies measured in N$ terms were down by 4% for May, largely on the back of a stronger SA Rand. So far this year, the growth is still positive at 3.4% and a decent 8.5% over the last 12 months.

Growth in foreign exchanges measured in their own respective currencies are all in the green so far this year, with the Eurostox Index ahead at 16% followed by the American Index at 13% and the British Index at 10%. Commodities in US Dollar terms fared excellent this year, with oil ahead at 37%, followed by copper at 33%. Gold is struggling with only 0.1% growth so far this year. The SA Rand has done well this year versus most major currencies – strengthening by 7% against the US Dollar and Euro and 3% against the British Pound. So there we have the growth so far this year – looking forward, we see signs of hope that the pandemic will allow the economy a chance to recover properly.