Market Review – September 2020
According to Statistics South Africa the number of employed people dropped by 2.2 million compared to the first quarter of 2020 – this is a result of the lockdown and other regulations around Covid-19. To boost the economy the country moved to lockdown level 1, allowing almost all industries to operate and opening up borders for international travel.
The rand gained 1% in September, ending the month at 16.7 ZAR/$. Petrol and diesel prices are scheduled to drop on Wednesday; the price of petrol 95 octane, both unleaded (ULP) and lead replacement (LRP), will drop by 32c/l, while the price of petrol 93 octane, both ULP and LRP, will drop by 23c/l.
Financials, having performed dismally this year so far, jumped up in September, the sector was up 2% in September – led by Capitec (up 24%), followed by Absa (up 15.6%). The prospects in the sector remain uncertain as banks still facing a lot of pressure with rising bad debts and reduced loan sales. Gold stocks pulled back in the month, but they are still doing quite well for the year. Harmony Gold sits at 74% in 2020 after dropping close to 20% in September.
The market pulled back in September after the rally in August. The Nasdaq shed 5% and the S&P500 dropped 3.92% in September. Markets may continue to be volatile due to uncertainties around the US presidential elections and pandemic stimulus package uncertainties.
Emperor Asset Management
Our Enhanced USD bundle is down 1.42% in the month compared to -3.9% for S&P500 Index. Year-to-date this bundle has done 42% compared to 4.09% for the S&P. We continue to believe in this thematic portfolio investing in cloud, e-commerce, fintech, biotechnology, security, etc.
All of our ZAR bundles including our segregated portfolios were down this month with the market. Our over-exposure to commodities and under-exposure (and for segs, short exposure) to financials were the cause of the under-performance for the month. Enhanced flexible equity, our premier local equity bundles, is up 10.75% and our Long-Short equity is up 17.5% for the year vs top 40 at -1.52%. We continue to monitor and analyse the market with the aim of outperforming over the long term.
All Performance data sourced from Bloomberg on 30 September 2020.
Junior Fund Manager
Terms and conditions apply. Emperor Asset Management (Pty) Ltd is an authorised financial services provider (FSP no. 44978). The value of a financial product can go down, as well as up, due to changes in the value of the underlying investments. An investor may not recoup the full amount invested. Past performance is not necessarily an indication of future performance. These products are not guaranteed. Examples are for illustrative purposes only