Pieter Koekemoer is head of the personal investments business.

AT THE HALFWAY mark, 2019 remains on track to be a year in which investment returns from equities may exceed expectations. Global markets recovered very strongly over the half year, with the MSCI All Country World Index, measured in rand, up more than 14%. The local equity market followed suit, with a healthy 11% return from the FTSE/JSE Capped All Share Index over the same period.

Markets delivered these results despite deteriorating economic growth. A big part of the reason for this is the impact on globalisation of the conflict between the US and China, as unpacked by guest writer, Professor Barry Eichengreen in this quarter’s cover story. While temporary ceasefires are certainly possible, the combination of the US President’s ego and politics, and China’s history, culture and traditions makes this a very tricky situation to contain. Despite the concerns, global market consensus shifted to factor in a future material relaxation of monetary policy. It is this prospect of lower interest rates that continues to propel markets.

The local economy remains challenged, with low consumer and corporate confidence levels reflected in a very weak first quarter GDP print of -3.2%. The issues are by now well known: lingering policy uncertainty; factional tension in the ruling party making it more difficult to implement much-needed reforms; and Eskom’s balance sheet problems, and the unclear state of its generation and transmission assets all act as constraints on domestic activity levels. These issues are reflected in domestic-focused companies reporting weak results, with even defensive shares struggling to defy the pressures of several years of a weak domestic economy and high structural inflation. We expect these headwinds to persist and remain cautious on businesses heavily exposed to the domestic economy.

This is, however, not the full story. The platinum miners continued their recovery (up between 40% and 100% year to date), as did Anheuser-Busch InBev (+40%), Naspers (+25%), MTN (+21%) and British American Tobacco (+17%). Other resource companies also continued to do well, including Anglo American (+51%) and BHP Billiton (+28%). The prospects for most of these businesses, while they happen to be listed in Johannesburg, have little to do with developments in South Africa.


Quinton Ivan reviews the track record of local companies expanding abroad, using Woolworths’ acquisition of David Jones in Australia and Sasol’s Lake Charles Chemicals Project as examples. We also cover two interesting global investment opportunities currently included in our funds. Lisa Haakman unpacks the investment case for luxury goods and explains why we prefer LVMH and Kering.

Sport lovers recently experienced a ‘super Sunday’, with a memorable ICC World Cup Cricket Final between England and New Zealand, an epic Wimbledon men’s final between Federer and Djokovic, a home victory for Lewis Hamilton at the Silverton Grand Prix and Daryl Impey’s stage victory in the Tour de France, all happening on one afternoon. This served as a powerful reminder of the inherent value in sports content. Of the great events of the weekend, the only one that is investable via public markets is Formula One, as explained by John Parathyras.

I hope you enjoy the read. As always, please do not hesitate to contact us via clientservice@coronation.com if any aspect of our service demands attention.

Pieter Koekemoer is head of the personal investments business.

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