Monthly Market Review
August 2024
August was marked by significant volatility across global markets, driven by various macroeconomic developments. While most financial assets managed to recover by the end of the month, the performance varied significantly by region and asset class. Below, we provide a breakdown of the key developments in each region.
LOCAL MARKETS
Exhibit 1 | Local performance (ZAR) for August 2024
Note: Data illustrated in ZAR. Source: FundFocus. Data as at 31 August 2024. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
South Africa
Equity Markets
In South Africa, the FTSE/JSE All Share Index posted a gain of 1.4% for August, reflecting a strong overall market despite broader concerns. The Resources sector struggled with a decline of -9.7% during the month, driven by weaker commodity prices and global demand concerns.
The Financials sector showed resilience with a robust gain of 5.7% in August, benefiting from a favourable interest rate environment. The industrial sector also saw positive performance, with an increase of 4.0% for the month.
Best performing equities
- Growth Point: +14.3%
- MTN: +12.3%
- MR Price: +12.1%
Worst performing equities
- Northam: -26.1%
- Gold Fields: -22.3%
- Exxaro: -17.9%
Bond Markets
The bond market performed well, with the All-Bond Index (ALBI) achieving a performance of 2.4% in August, supported by lower interest rate expectations and a stronger rand.
The All-Property Index (ALPI) recorded a significant gain of 8.3% during August, reflecting ongoing investor confidence in South Africa’s property market.
GLOBAL MARKETS
Exhibit 2 | Global performance (USD) for August 2024
Note: Data illustrated in USD. Source: RMB. Data as at 31 August 2024. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
Commodities
On the commodities front, oil prices posted a decline of -4.8% (USD) in August, reflecting stagnant global demand despite ongoing geopolitical tensions. Gold prices increased by 2.3% (USD) during the month, maintaining its status as a favoured safe-haven asset amidst broader market uncertainty.
Other key commodities, such as copper, remained relatively stable with a 0.2% (USD) performance in August. The outlook for commodities remains mixed, with ongoing market uncertainty likely to influence future performance.
United States
Market Performance
In the United States, the S&P 500 Index posted a gain of 2.3% for August, driven by better-than-expected economic data and a dovish stance from the Federal Reserve. Defensive sectors, such as Consumer Staples and Healthcare, performed well as investors sought safety amidst broader market uncertainty.
While still in positive territory, the technology sector faced some headwinds, but overall market sentiment remained optimistic.
Europe
European markets remained relatively stable in August, with the STOXX All Europe Index posting a gain of 1.8%. Economic activity in the region continued to be sluggish, particularly in the manufacturing sector, which struggled with lower demand and supply chain disruptions.
The services sector showed resilience, helping to offset some of the broader economic weaknesses. The FTSE 100 Index in the UK was slightly positive, with a performance of 0.9% in August, as ongoing inflationary pressures and economic uncertainty weighed on market performance.
Asia
August was a volatile month for Japanese markets, with the Nikkei 225 Index dropping -12.4% on 5 August, the most significant sell-off in Japanese shares since Black Monday in 1987. The Bank of Japan’s unexpected interest rate hike to 0.25% further strengthened the yen, disrupting financial positions that relied on low-cost yen borrowing, such as carry trades in US tech stocks and emerging market loans. This abrupt shift triggered a flash crash, causing Japanese equities to briefly lose 20% of their value before partially recovering. The stronger yen also added pressure on Japanese exporters. Despite the volatility, the Nikkei 225 ended August -1.2% lower, maintaining a year-to-date gain of 15.5%.
Chinese equities faced a challenging August, with the country’s economic stimulus efforts showing limited effectiveness in boosting consumer demand. The ongoing struggles of the property sector continue to weigh heavily on investor sentiment, leading to a mixed performance in the country’s equity markets. The Shanghai Composite Index closed August down by -3.3%, bringing its year-to-date loss to -4.5%. In contrast, Hong Kong’s Hang Seng Index saw a 3.7% increase for the month, resulting in a year-to-date gain of 5.5%.
Emerging Markets
Emerging markets experienced mixed results in August. The MSCI Emerging Markets Index recorded a modest gain of 1.6% supported by gains in major markets such as China and Brazil. The MSCI BRIC Index posted an increase of 1.5% in August, with China leading the way due to renewed optimism about potential government stimulus to support economic growth.
However, challenges remain, particularly in regions heavily dependent on global manufacturing and exports. Economic slowdowns and geopolitical risks continue to pose significant challenges in these markets.
Conclusion
August 2024 presented a dynamic landscape of market volatility driven by varied global economic factors. While some regions and asset classes experienced significant swings, others demonstrated resilience and recovery. South Africa’s diverse performance across sectors and the robust bond and property markets showcased localised strengths amidst global uncertainty.
As we move into the final quarter of the year, maintaining a balanced and diversified investment strategy will be important. The evolving economic landscape, with potential U.S. interest rate cuts, and ongoing geopolitical risks, emphasizes the importance of active management of portfolios and strategic diversification. At OIG we aim to navigate market complexities, seize opportunities, and deliver sustainable value to our clients throughout changing market conditions
Disclaimer
Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, Optimum Investment Group (OIG) does not accept any responsibility for any claim, damages, loss or expense, however, it arises, out of or in connection with the information in this document, whether by a client, investor or intermediary.
Optimum Investment Group (Pty) Ltd. Is an Authorised Financial Services Provider (43488).
All investments involve risk, including the potential loss of principal. There is no assurance that any financial strategy will be successful. OIG does not guarantee that the results of any advice, recommendations, or strategies will be achieved. Before making any investment decisions, customers should thoroughly review all relevant investment product documents and information. It is essential to assess whether an investment aligns with your financial situation, objectives, and risk profile.
This document may contain forward-looking statements identified by terms such as “expects,” “anticipates,” “believes,” “estimates,” “forecasts,” and similar expressions. These statements involve risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. OIG is not responsible for any trading decisions, damages, or other losses resulting from the use of the information, data, analyses, or opinions provided.
Past performance does not guarantee future results. Neither diversification nor asset allocation ensures a profit or protects against a loss.
The information, data, analyses, and opinions presented herein are for informational purposes only and do not constitute investment advice or an offer to buy or sell any security. References to specific securities or investment options should not be considered an offer to purchase or sell those investments. The performance data shown reflects past performance and is not indicative of future results.
The opinions expressed are those of OIG as of the date written, are subject to change without notice, and do not constitute investment advice.
