![]() ![]() While the quantum and pace of this outperformance was unpredictable, this outcome was consistent with our expectations for better domestic performance as shared in the January edition of From my Inbox. However, those that have the fortitude to roll with the punches are likely to be rewarded in due course, as our research indicates historically high levels of upside to fair value for the shares held in our global portfolios.ĭomestic assets were much more resilient, with equities and bonds up 7% and 2% in rands, respectively, outperforming their global equivalents by around 20% over the quarter. As Mike Tyson quipped, “it’s easy to have a plan until you get punched in the face”. These declines were amplified in rand terms, as the dollar weakened by more than 8%, its worst first quarter performance against the local currency since 1973. Market segments more exposed to the risks currently in focus saw bigger declines, with Europe down 7%, the Nasdaq, dominated by long-duration growth shares, down 9%, Chinese equities down 14% and Russian equities becoming technically uninvestable for the foreseeable future. The net market result was dollar declines of 5% and 6% for global equities and bonds, respectively. In South Africa, we expect inflation of around 6.2% this year, compared to 4.5% in 2021. The risk of inflation expectations becoming unanchored has increased, with the IMF forecasting 2022 inflation at around 6% for developed markets (versus targets around 2%) and 9% for emerging markets (versus targets of 3% to 6%). The conflict triggered a further spike in energy, metals and food prices, which contributed to the existing inflationary pressures resulting from the easy monetary policies and supply chain disruptions caused by the Covid-19 response, and the dearth of new fossil fuel investments in response to climate change concerns. As covered in detail in the first quarter’s fund commentaries, the headlines were dominated by the conflict between Russia and Ukraine/the West, adding to the existing pressures of Covid-19 and climate change. This is what happened at the start of 2022, specifically for international investors. The newsflow nudges become much harder to ignore when well-established positive market trends break down in response to unsettling events. Our challenge will always remain the much harder one of identifying the few signals that are relevant to your long-term objectives. The downside of the constant information firehose coupled with the ability to respond instantly, for investors and their fund managers alike, is how easy it is to be tempted to respond to noise. Regulatory requirements and industry practice enforce a quarterly reporting cycle, even when the investment horizon is typically decades into the future. This in turn drives the incessant pace of the news cycle, priming millions of market participants to buy or sell in response to the headlines. Financial markets operate nearly continuously, which provide the comforts of objective price discovery and instant liquidity when you need access to your investment. ONE OF THE great disconnects in our collective investment endeavour is that, while we all know results are optimised when you adopt a patient long-term approach, we are constantly nudged to make short-term decisions by the way society and our industry is organised. The information contained in or on the Site does not constitute an offer or an invitation to subscribe for or make use of any service or investment by a person, whether natural or legal, which is resident or situated in any jurisdiction where such offer or invitation would be unlawful, or in any jurisdiction in which Coronation Fund Managers Limited, including all of its subsidiaries, is not qualified to make such offer or invitation, or to persons to whom it would be unlawful to make such offer or invitation.īy clicking “ACCEPT” below, you consent to the above terms and conditions and, in particular, you confirm that you are neither an individual nor institutional investor located or resident outside of South Africa. The Site is not intended or permitted to be accessed or used by any person who is not an Intended Investor, including any person (natural or juristic) who is located in or is resident of the United States of America. Please take note that the site you are about to access (“Site”) is intended only for retail (individual) investors resident in South Africa (these being the “Intended Investors”). ![]()
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