Notwithstanding the lingering Covid-19 uncertainty and distressed economic conditions around the world, equity markets continued to grind higher in anticipation of the post Covid-19 economic recovery, aided by unprecedented fiscal stimulus and record-low interest rates.

During the third quarter of 2020 (Q3-20), the MSCI All Country World Index (+8% in US dollars) rallied to recover all of its losses for the year. US equity markets in particular were strong, with the S&P 500 (+8.9%) and Nasdaq (+12.6%) both reaching new all-time highs. Emerging markets, underpinned by China, also produced strong returns of 9.6%, while European equity markets lagged at 4.5%. The Bloomberg Barclays Global Aggregate Bond Index gained 2.7% during Q3-20. Low yields, record levels of government indebtedness and continued monetary policy expansion by central banks around the world leave us very negative on the long-term return prospects for global bonds. Gold continued its rally, increasing nearly 7%.

The rand remained volatile but ended the quarter more than 3% stronger against the US dollar on broad-based dollar weakness. Local sentiment also improved, informed by a relaxation in lockdown restrictions and some long-anticipated arrests by our law enforcement authorities. More arrests, and successful prosecutions, are crucial to restoring investor confidence in our governance structures and our economy. While the All Bond Index ended Q3-20 up 1.5%, its 3.6% return over the past 12 months is still behind the 5.6% cash yield over the same period. The FTSE/JSE Capped Shareholder Weighted All Share Index appreciated 1.0% for the quarter, but the outcome over the past 12 months remains a decline of 5%. The resources sector had another very strong quarter and was up 6%. Platinum stocks especially were up strongly (+21.6%) on the back of a rising platinum group metals basket price and after reporting good annual results. The industrial and the financial sectors (both down around 2%) continued their recent underperformance, while the property sector had another challenging quarter and ended down 15%.

All global returns mentioned above are expressed in US dollar and all South African returns in rand.