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Ok. Got itFiscal data released in December showed some resilience in revenues, but expenditure still far outpace planned expenditure. Read our latest market review.
Third quarter GDP disappointed, printing at -0,2% over the period. Electricity and logistic challenges weighed on the production side, with added disappointments from the agriculture sector. The current account narrowed over the third quarter, supported by an improved trade surplus driven by markedly lower imports. Fiscal data released in December showed some resilience in revenues, but expenditure still far outpace planned expenditure. This sets the scene for a difficult Budget 2024, even if largely anticipated at this juncture.
Noteworthy developments in the energy landscape include cabinet’s approval of the draft Integrated Resource Plan (IRP) 2023, which outlines the intended mix of energy generation for the upcoming years. After some delay, the seventh Bid Window for an additional 5000MW of renewable energy was announced in December. Eskom will see new leadership, with Daniel Marokane taking the reins as the new CEO in upcoming months. Despite ongoing contestation, the National Health Insurance (NHI) Bill passed through the National Council of Provinces, ascending to the desk of President Ramaphosa.
Headline inflation for the year to November 2023 moderated to 5,5% from 5,9% the previous month, below market expectations. Core inflation printed at a marginally higher 4,5%. A decrease in fuel prices was the most significant contributor to the monthly decline, while food inflation edged higher to 9,0% y-o-y with factors such as avian flu still at play.
Producer inflation for November also trended lower to 4,6% from a figure of 5,8% the prior month. The BER fourth quarter survey recorded a deterioration in inflation expectations, with expectations in the medium term adjusted upwards.
Domestic assets rallied alongside global equity and bond markets. The FTSE/JSE All Bond Index gained 1,4% in December, bringing the returns over the quarter to a punchy 8,1%. With a weaker US dollar offering respite, the Rand appreciated by 3,3% against the greenback over the quarter, bringing the depreciation year to date to 7,6%. Local equity markets continued its recovery in December, with strong returns from domestically focussed mid and small cap counters. It was not all smooth sailing, however, as Chinese regulators published a draft regulatory framework for the online gaming industry, seeking to curb excessive spending. Markets had a kneejerk reaction, which saw Naspers (-9,7%) and Prosus (-10,6%) mirror monthly losses from Chinese technology company Tencent (-10,2%), although the intraday moves were more extreme.
Local equity markets ended the quarter in the green, with the FTSE/JSE All Share returning 6,9% with gains across industrials (5,9%) and financials (12,3%). While large capitalisation stocks benefitted from the broader rally, mid (10,0%) and small cap stocks (8,6%) had even more to gain from improved market sentiment. Declining bond yields and the prospect of lower interest rates also helped the property sector stage a comeback over the quarter with a return of 16,4% alongside other interest rate sensitive assets, improving the returns for 2023 to 10,1%.
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Nedgroup Private Wealth (Pty) Ltd and its subsidiaries (Nedbank Private Wealth) issued this communication. Nedgroup Private Wealth is a subsidiary of Nedbank Group Limited, the holding company of Nedbank Limited. ‘Subsidiary’ and ‘holding company’ have the same meanings as in the Companies Act, 71 of 2008, and include foreign entities registered in terms of the act. There is an inherent risk in investing in any financial product. The information in this communication, including opinions, calculations, projections, monetary values and interest rates, are guidelines or estimations and for illustration purposes only. Nedbank Private Wealth is not offering or inviting anyone to conclude transactions and has no obligation to update the information in this communication. While every effort has been made to ensure the accuracy of the information, Nedbank Private Wealth and its employees, directors and agents accept no liability, whether direct, indirect or consequential, arising from any reliance on this information or from any action taken or transaction concluded as a result. Subsequent transactions are subject to the relevant terms and conditions, and all risks, including tax risk, lie with you. Nedbank Private Wealth recommends that, before concluding transactions, you obtain tax, accounting, financial and legal advice. Nedbank Private Wealth includes the following entities:
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We connect you to so much more than great advice. We provide insights, technical expertise, global opportunities, and a wide range of solutions and services.