South Africans (SA) remained locked down at level 4 for the duration of May, although with a mid-month easing of some level-4 restrictions, the most significant of which was the lifting of all restrictions on ecommerce (with the exception of alcohol and cigarette sales). As the country moves to level 3 at the start of June, most economic activity will be re-allowed, but with strict health protocols in place and schools will gradually start to re-open, although the leisure and hospitality sectors remain closed and inter-provincial travel remains heavily restricted.

The SA Reserve Bank (SARB) cut the benchmark repo rate another 0.5% to 3.75% in May, for a cumulative 2.5% of cuts since the start of the crisis. The SA government’s 10-year bonds saw their yields drop from 10.5% to 9.4% during May as the FTSE/JSE SA All Bond Index rallied 7.1% MoM, leaving it up 21.8% since its 23 March low. The SA rand also finally benefitted from the recent rally in global risk assets as it strengthened by 5.6% against the US dollar, making it one of the best-performing EM currencies for the month, though it remains 20% weaker against the US dollar YTD, with only the Brazilian real faring worse YTD (-24.7%).

Compared with the good performances of SA bonds and the rand, SA’s equity and listed property markets fared less well in May, as the FTSE/JSE Capped SWIX and FTSE/JSE SA Listed Property indices fell 0.4% and 0.8% MoM, respectively.

Source: Anchor – Peter Liddle

Source: PortfolioMetrix

SA PROFILE PERFORMANCE – May 2020