With local municipal elections set for early November, campaigning dominated headlines. Worsening load-shedding upped the stakes as it highlighted the state of service delivery and the importance of the proposed energy reforms. The Department of Minerals and Energy announced the preferred bidders for the fifth round of the Renewable IPP Procurement Programme, which is expected to add about 2 500 MW of capacity in due course. South Africa was removed from the UK red list for travel, removing another obstacle to an improved summer period for the beleaguered tourism sector.

The South African Reserve Bank’s Monetary Policy Review highlighted an intensification of inflationary risks, increasing the market-related probability of a hike in interest rates in November 2021. Monthly increases in both producer and consumer price indices added to the argument. The rand weakened by about 0,7% against the US dollar in October and a rise in global bond yields weighed on the local bond market. The All Bond Index declined by 0,5% in October, dragging the returns over the year to 4,8%.

Bank preference shares had another outsized month of performance, after Investec Bank announced that it is making a firm offer to buy back all outstanding listed preference shares issued by Investec Bank. This helped the asset class gain 10,9% over the month, bringing performance year to date to 37,0%.

After a difficult third quarter, local equity markets recovered some lost ground, with the FTSE/JSE All Share Index gaining 5,2%. Domestically exposed small- and mid-cap counters continued to print positive returns, but large-cap counters outperformed with positive returns from bellwethers Naspers (3,9%) and Prosus (11,4%). The resources sector rebounded 8,4%, with notable performance from the precious-metals sector (+18,3%), while financials declined by 3,8%, reversing recent positive trends. The interest-rate-sensitive property sector declined 1,7% over the month. The removal of travel restrictions for UK holiday makers and less stringent local lockdown restriction helped the travel, leisure and services sectors to top the lists for sector performance in anticipation of a better holiday season.