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Market Reviews 

Market Review - Sihle Ndhlala

July 2019

In July international markets built on the encouraging rebound seen in June after the unpleasant drawdowns that occurred during May. Despite the uncertainty surrounding Brexit, London’s FTSE100 was the best global performer, returning 2.17% for the month and nearly 13% for the year to date. One has to bear in mind that London is the primary home for many mining houses, and the materials sector has been particularly buoyant in 2019.

Other European markets, such as Germany and France, were not as strong in July, but in the year to date have performed quite well with returns of above 15%.

The Nasdaq has been the outstanding index of the year so far, and its 2.11% gain in July added to its 23.21% rise for the year. Close behind are the other US indexes, the Dow and S&P 500, with Japan’s Nikkei 225 showing nice resilience. Hong Kong has its own domestic troubles, the sometimes violent repatriation dispute with China perhaps affecting sentiment towards Hang Seng stocks, which fell 2.68% in July and 7.48% in 2019.

Emerging markets have been disappointing all year. July’s fall of 1.69% further dented an annual return of just 7.38%. Given this, it was no surprise that the JSE all share index fell 2.4% in July, bringing its performance for 2019 to 7.7%. As unexciting as this was, equities still beat both bonds and property in the year to date.

Overall, as noted by many analysts, investor sentiment remains relatively poor as concerns over domestic economic growth and political uncertainty place a damper on markets.

Looking more closely at the JSE, we can see that basic materials have had an excellent run, returning 12.36% over the year. The sector pulled back 5.24% in July, but prospects still look good for resources stocks such as AngloGold, Gold Fields, and Anglo American.

Sasol has been a big disappointment. The stock fell 28.3% in July, and has fallen close to 42% in the year to date. Investors have not been impressed with management having to allocate an additional $1-billion to the Lake Charles Chemical Project in the US, which cut Sasol’s expected earnings over the next three years by 25%.

The standout performer in the local market was Woolworths, up 12.5% in July. The stock is still flat for the year, but it is clear that management is well on the way to sorting out the company’s problems in Australia. Other stocks showing welcome strength were MTN, British American Tobacco, Richemont and Naspers.

In the case of JSE heavyweight Naspers, the market obviously likes the potential for further unbundling of its assets, which will unlock value and provide excellent new investment opportunities.


Although the fund was down 0.82% in July, it benefited from gains in international markets and short positions in Brait, Massmart and others.

LONG- SHORT 140/40 (SJR)

The fund was up 0.45%, building on a steady performance over the past six months based on strategic longs in basic materials, hedged by a short position in the JSE Top 40 index.


The JSE Top 40 index fell 2.68% in July, which dragged down the performance of all the bundles that have a large domestic equity component. The more conservative portfolios were less badly affected, given their bias towards stability or income, and it was nice to see strong 3%-plus returns recorded by the international bundles.


 The 55,000 level on the JSE Top 40 remains elusive, and by the end of July the index was bobbing around the 50,798 mark. There are no obvious technical signs of weakness in the local market, but as usual the JSE will be at the mercy of much larger players in the global investment picture. Donald Trump appears to be amping up the trade war with China, which has unsettled markets, so we do not expect big things from August. Given the macroeconomic turmoil we’ve been through in the last year or so, a flat market is often not a bad thing at all!

JSE Top 40 Index

Source: Bloomberg

Happy investing!

Sihle Ndhlala
Junior Fund Manager



This document is for information purposes only and does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase any particular investment. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon the information. The value of participatory interests may go down as well as up and therefore is not guaranteed. The past performance is not necessarily a guide to the future performance. Emperor Asset Management is an authorised Financial Services Provider FSP 44978.



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