EQUITY MARKETS Exercise
EQUITY MARKETS Exercise vigilance Where to from here for equity markets? By Quaniet Richards: Head of Institutional Business, Nedgroup Investments Chart 2 Rolling 3 -year real return 50% 40% 30% 20% 10% 0% -10% The past three years have not been an easy time for investors in SA equities. And, with growing uncertainty and volatility almost everywhere, it is understandable that many people find it hard to imagine things turning around. However, the important thing to Chart remember 1 in times like these is that SA equities have experienced this kind of underperformance before. Chart 1 below plots the three-year per annum real return (return less 8% inflation) for local and international asset classes in rands and shows that all the asset classes except 6% 5,6% domestic bonds and cash have underperformed inflation, 4% while domestic bonds was the only asset class to have 2% 1,3% outperformed inflation plus 3% and 5%. Chart 1 3% real return: 60 months 40% Source: Morningstar -10% 3-year annualised 0% real return vs SA Inflation (5.47%) as at 31 December 2018 -6,7% SA Listed Property Index 1,3% SA Listed Property -0,9% Index -4,3% Domestic 8% Equity Domestic Property Domestic Bond -5,3% Domestic Cash Global Equity Global Property Global Bond Global Cash All Bond Index STeFI Call MSCI All 3 Country Years FTSE Barclays CPI+3% Global US 3 month CPI+5% CPI+6.5% 6% 5,6% World EPRA/NAREIT Bond Index deposits Developed Property Index Domestic Equity Domestic Property Domestic Bond 4% Domestic Cash Global Equity Global Property Global Bond Global Cash Chart 2 Rolling 3 -year real return 50% 30% 20% 10% 0% 3% real return: 61 months -6% -8%
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