MARKET REVIEW. September 2017

Transcription

1 MARKET REVIEW September 2017

2 Contents Global Market Review 1. Global Market Data Table 2. Global Market Commentary 3. Global Market Performance Graph 4. Global Sector Performance 5. US Dollar vs International Currencies 6. Commodities Performance Local Market Review 1. The South African Rand 2. The JSE All Share Index 3. 5 Year JSE All Share Index 4. 5 Year JSE All Share Index vs Global Indexes (USD) 5. The JSE All Share Index Subsectors 6. The South African Fixed Income & Property

3 SKYBOUND CAPITAL Global Market Review

4 Data Tables INTERNATIONAL INDICATORS LOCAL INDICATORS Closing Price September 2017 August 2017 Year to Date 2016 Closing Price September 2017 August 2017 Year to Date 2016 MSCI World (US$) % -0.07% 14.24% 5.32% Top40 Index % 2.30% 12.47% -4.14% MSCI Emerging Markets (US$) % 2.01% 25.45% 8.58% Mid Cap Index % 4.46% -6.65% 23.42% JSE All Share % 2.38% 9.73% -0.08% Small Cap Index % 1.97% -3.09% 15.92% MSCI China % 4.17% 41.48% -1.38% Resources % 3.87% 9.05% 26.44% Stoxx Europe % -1.05% 7.40% -1.20% Industrials % 1.74% 17.81% % S&P % 0.05% 12.53% 9.54% Finanicals % 2.93% 0.20% -1.03% Platinum Producers % 9.66% -6.24% 50.46% Oil Spot % -0.51% 1.27% 52.41% Gold Producers % 8.26% -2.77% 28.85% Gold Spot % 4.09% 11.10% 8.56% Platinum Spot % 6.21% 1.00% 1.16% 10 Year Governenment Bond 8.55% 0.03% 0.28% 1.70% 5.12% JSE Listed Property % 0.76% 8.15% 10.20% Rand / Dollar % 1.38% 1.14% 11.33% All Bond Index % 1.03% 7.80% 15.45% Dollar / Pound % -2.16% 8.46% % Rand / Pound % -3.52% 7.18% % Dollar / Euro % 0.57% 12.30% -3.10%

5 Commentary SOUTH AFRICA The JSE ALL-Share Index ended the month of September down (-1.67%), its first negative month in three months. By sector, the largest gainer was the Real Estate Sector that closed the month positively, up 1.35%. By Sector the worst performer was the Technology sector, down 6.78%. The South African 10 year government bond strengthened by 0.18% in September ending the month at 8.56%. Year to date the 10 year government bond has strengthened by 0.38%. The month of September saw net foreign outflows of R13.8 billion, amid escalating geopolitical tensions between the United States and North Korea coupled with the German election results, where the Alternative for Germany party won seats in Parliament, the first far-wing party to win seats in Parliament since the 1950s. This added to global uncertainty, which in turn reduced investor s appetite for risk assets. On local macroeconomic developments, the second quarter of 2017 experienced GDP growth which beat estimates, reported at 2.5% (est. 2.1%). This was supported by a 33.6% increase in agriculture, forestry, and fishing sector. Despite the aforementioned, the quarterly employment data indicated that non-agricultural employment decreased by 0.4% ( jobs) in the second quarter of 2017 following jobs lost in the first quarter of The Current account deficit widened from 2.0% to 2.4% of GDP, this was weighed down by the moderation of commodity prices which negatively impacted South African exports. EUROPE The STOXX 600 added 3.82% for the month of September, recorded its first monthly gain in four months. By sector, automobile stocks featured as the strongest performer, up 10.81%. The worst performing sector for the month were basic resources stocks, down 1.59%. The German DAX featured as the region s top performer, up 6.41%, followed by the French CAC 40, up 4.80%. In contrast the FTSE 100 was down 0.78%. The rally in European equities was supported by a weaker Euro, where the Euro has depreciated by 0.81% against the US Dollar. European equities were up 2.32% for the third quarter. Automobile stocks were the strongest performers for the third quarter, up 10.58%. Year-to-date, with the German DAX, French CAC 40, and FTSE 100 were up 11.74%, 9.61%, and 3.22% respectively. On 25 September, Angela Merkel won her fourth term as German Chancellor. The Alternative for Germany party won seats in Parliament, the first far-wing party to win seats in Parliament since the 1950s. This has contributed to the political uncertainty in the Eurozone along with ongoing Brexit negotiations. The ECB President Mario Draghi boosted his growth forecast to 2.2% for the region, its fastest pace since Draghi also announced that the ECB had kept its stimulus programme unchanged for the time being. The SARB monetary policy committee made the decision to keep the repo rate unchanged at 6.75%, contrary to market expectations for a 25 basis point reduction. The SARB highlighted that the exchange rate remains a key risk to the inflation outlook, amid August consumer price inflation (CPI) was reported at 4.8% (YoY). UNITED STATES The S&P 500 ended the month of September up 1.93%, reaching the point mark, a new record high. The largest gainer was the energy sector, which closed the month positively (up 9.77%). The Dow Jones and NASDAQ Composite Index advanced in September, adding 1.05% and 2.08% respectively. US equities posted an eighth consecutive quarter of gains, continuing their longest winning streak since the beginning of 2015, amid double digit corporate earnings results. The NASDAQ Composite Index gained 5.79% for the quarter. Technology stocks were the best performing sector in the S&P 500, up 8.3%. Consumer staples was the only sector to decline in the third quarter, down 2.02%. Year-to-date, the NASDAQ, Dow Jones, and S&P 500 Index advanced, up 20.67%, 13.37%, and 12.53%. On 20 September, the Federal Reserve kept interest rates unchanged at 1.25%, however Federal Reserve Chair Janet Yellen stated that gradually raising interest rates is the most appropriate policy approach and that it would be imprudent to stall monetary policy until inflation reaches 2%. YoY Core CPI for August was reported at 1.7% (est. 1.6%) and 2Q GDP was reported at 3.1% (est. 3.0%). The final fiscal quarter s challenges include escalating tensions between the US and North Korea, where the US has called on Russia and China to implement more punitive measures to pressure North Korea to abandon its atomic and missile programs. The UN approved new sanctions aimed at punishing North Korea for its latest missile and nuclear tests. Investors will be monitoring the developments of Trump s proposed tax overhaul which is expected to provide a burst of growth in the short term, according to economists. CHINA AND ASIA Asian equities ended the month of September relatively flat, up 0.16%. The Nikkei 225 was the region s best performer, up 3.61%, erasing last month s losses. The Hang Seng and Shanghai Composite Indices ended the month in the red, down 1.49% and 0.35% respectively. Asian equities posted a third consecutive quarter of gains, up 4.26% for the third quarter. The Shanghai composite index gained 4.90%, the Hang Seng gained 6.87% for the quarter and the Japanese Nikkei gained 1.91% for the third quarter. Asian markets opened the month on the back foot, weighed down by banking shares across the region and with North Korea continuing to dominate headlines. From the 6 th of September, Asian equities began to rally as Chinese companies offset losses in South Korea and Japan, amid speculation of a probable missile launch by North Korea. On 12 September, Asian equities experienced a slight pullback amid signs that China s economy is cooling. Chinese YoY Industrial Production for August was below estimates, reported at 7.8% (est. 8.2%). In addition, fixed asset investment grew by 7.8% from January to August (est. 8.2%). Chinese retail sales also fell short of estimates, reported at 10.1% for August (est. 10.5%). On 20 th of September, Asian equities fell considerably weighed down by Chinese stocks after the S&P Global Ratings downgraded the mainland for the first time since 1999 and followed with a downgrade for Hong Kong.

6 Performance Graph (USD) 6,00% 4,00% STOXX Europe 600 Index; 3,82% 2,00% MSCI World Index; 2,08% S&P 500 Index; 1,93% 0,00% MSCI Asia Pacific Index; 0,16% -2,00% -4,00% JSE Africa All Share Index; -5,47% -6,00% -8,00% JSE Africa All Share Index MSCI World Index S&P 500 Index STOXX Europe 600 Index MSCI Asia Pacific Index

7 Sector Performance (USD) 10,0% 8,0% 8,7% 6,0% 4,0% 3,9% 3,7% 2,8% 2,0% 2,1% 1,7% 2,0% 1,2% 1,0% 1,7% 0,8% 0,0% -2,0% -1,0% -0,3% -1,5% -0,6% -1,8% -2,6% -2,6% -4,0% -3,5% -3,4% -6,0% Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecom Service Utilities Developed Markets Emerging Markets

8 YEN PER US DOLLAR US DOLLARS PER AUSTRALIAN DOLLAR US DOLLARS PER POUND US DOLLARS PER EURO MONTHLY REVIEW Performance Analysis (USD vs Global Currencies) 1,37 1,36 1,35 1,34 1,33 1,32 1,31 1,30 1,29 1,28 1,27 1,26 1,25 1,34 1,21 1,20 1,19 1,18 1,17 1,16 1,15 1, , , , , ,78 0, ,77

9 Market Performance (Commodities) 91 1 Year Bloomberg Commodities Index Commodities ended the month of September largely in negative territory, with the Bloomberg Commodity Index down 0.23%. Commodities ended the third quarter in the green, up 2.25%. Commodities were negatively impacted amid data indicating that China s economy is cooling. Gold and platinum were down 2.81% and 8.83% respectively. In contrast, Palladium continues to be the strongest performer, up 0.53% in September and 37.12% year to date. Oil had a strong performance during September, up 9.85%. Hurricane Harvey negatively affected oil production across the Texas Gulf coast. Oil prices began to rise after strong global refining margins and the reopening of U.S. Gulf Coast refineries provided a more bullish outlook after sharp drops due to Hurricane Harvey COMMODITY PRICES (US$) Closing Price September 2017 August 2017 Year to Date 2016 Gold % 4.10% 11.27% 8.63% Platinum % 6.14% 0.96% 1.11% Palladium % 5.26% 37.12% 21.57% Copper % 6.48% 17.94% 17.35% Silver % 4.13% 4.30% 15.84% Aluminium % 10.71% 22.85% 12.52% Oil Spot % -0.51% 1.27% 52.41% Coal % 2.25% 10.01% 74.70% Natural Gas % 8.80% % 59.35% Sugar % -3.42% % 28.02% Cocoa % -4.56% -3.90% % Coffee % -7.97% -6.57% 8.17% Corn % 0.57% 12.30% -3.10% 40% 30% 20% 10% 0% -10% -20% 1 Year Gold, Platinum and Palladium Gold Platinum Palladium

10 SKYBOUND CAPITAL South African Market Review

11 Performance (South African Rand) 13,80 RANDS PER US DOLLAR 13,60 13,57 For the month of September, the performance of the Rand was characterised by two periods. The Rand performed well during early September, following the release of positive GDP data which took South Africa out of a technical recession, coupled with a weaker US Dollar after the Federal Reserve s vice chairperson, Stanley Fischer, made the announcement that he plans to resign.in October.. 13,40 13,20 13,00 From the 6 th of September the Rand depreciated considerably against major currencies after the ECB made the decision to keep interest rates unchanged coupled with positive Eurozone growth forecasts. The Rand continued to depreciate, along with other emerging market currencies, against major currencies, after US Federal Reserve Chair Janet Yellen confirmed that the Fed would raise interest rates once more in ,80 12,60 Closing Price September 2017 August 2017 Year to Date 2016 Rands/US Dollar % 1.38% 1.14% 11.33% 18,40 17,90 RANDS PER POUND 18,16 Rands/Pound % 3.52% -7.18% 25.69% Rands/Euro % 0.77% % 13.99% 17,40 16,90 17,50 16,50 3 Year Rand vs US Dollar 16,40 15,90 15,50 14,50 13,50 12,50 16,20 16,00 15,80 15,60 RANDS PER EURO 16,02 11,50 15,40 10,50 15,20 15,00 9,50 14,80

12 Performance (JSE All Share Index) JSE All Share Index Cumulative Performance Top 10 Performers 0% 14% 13,21% 13,19% 12,94% -1% -1% 12% 10% 8% 11,58% 11,27% 11,12% 11,02% 10,33% 9,64% -2% 6% -2% -3% 4% 2% 0% -3% Performance of 10 Largest Index Members JSE All Share Index Monthly Performance 8% 6% 4% 2% 0% -2% -4% -6% -8% -0,64% 6,17% -3,37% 3,13% 4,82% -3,75% -5,33% -5,75% 8,00% 6,00% 4,00% 2,00% 0,00% -2,00% -4,00% -2,62% -0,75% 0,88% 4,21% -3,11% 1,78% 3,38% -0,47% -3,64% 6,97% 2,38% -1,67% -6,00%

13 5-Year JSE Performance (ZAR)

14 5 Year JSE vs Leading Global Indicators (USD) 80% 72,4% 60% 49,9% 40% 31,4% 28,1% 20% 0% -2,0% -20% -40% S&P 500 Index MSCI World Index MSCI Asia Pacific Index STOXX Europe 600 Price Index JSE Africa All Share Index

15 Performance (JSE All Share Index Subsectors) Closing Price September 2017 August 2017 Year to Date 2016 Top40 Index % 2.30% 12.47% -4.14% Mid Cap Index % 4.46% -6.65% 23.42% Small Cap Index % 1.97% -3.09% 15.92% Resources % 3.87% 9.05% 26.44% Industrials % 1.74% 17.81% % Finanicals % 2.93% 0.20% -1.03% Platinum Producers % 9.66% -6.24% 50.46% Gold Producers % 8.26% -2.77% 28.85% Sep Forward P/E August Forward P/E Sep Dividend Yield Top40 Index % Mid Cap Index % Small Cap Index % Resources % Industrials % Finanicals % Platinum Producers % Gold Producers % 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8% Market Cap Performers Top40 Index Mid Cap Index Small Cap Index

16 South African Fixed Income & Property Relative Property Performance Top & Bottom Performers 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% -2,0% -3,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% -2,0% 12,9% 10,3% 8,2% 7,7% 6,4% 0,3% 0,1% 0,0% -0,5% -4,0% FTSE/JSE SA Listed Property Total Return Index -6,0% -4,4% FTSE JSE All Share Index Total Return Value ALBI Total Return Index STeFI Cash Rate SA 10 Year Government Bond Yield Spread of Dividend Yield vs Government Bonds 8,70% 8,65% 8,60% 8,55% 8,50% 8,45% 8,40% 8,35% 8,30% -2,0% -2,2% -2,4% -2,6% -2,8% -3,0% -3,2% -3,4%

17 Disclaimer This presentation (the Presentation ) is issued ona confidential basis by Skybound Capital Limited ( Skybound ) for information purposes only and is subject to change without notice. This Presentation, its contents and any information provided or discussed in connection with it are strictly private and confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose, without the consent of Skybound (provided that you may disclose this Presentation on a confidential basis to your legal, tax or investment advisers (if any) for the purposes of obtaining advice). Acceptance of delivery of any part of the Presentation by you constitutes unconditional acceptance of the terms and conditions of this notice. This Presentation does not itself constitute an offer to subscribe for or purchase any securities, investment product or investment management services. This Presentation is not intended to be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete. It is provided for information purposes only. Any investment is subject to various risks, none of which are outlined herein. All such risks should be carefully considered by prospective investors before they make any investment decision. You are not entitled to rely on this Presentation, and no responsibility is accepted by Skybound or any of its directors, officers, partners, members, agents or advisers or any other person for any action taken on the basis of the content of this Presentation. Skybound does not undertake to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies therein which may become apparent. The views, opinions and forecasts expressed in this document are based on Skybound s research, analysis and house views at the time of publication. Tax assumptions may change if the law changes and the value of tax relief will depend upon individual circumstances. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of Skybound or any of its respective directors, officers, partners, members, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any of them for any such information or opinions. Past performance is not indicative of future results. The value of investments may fall as well as rise and investors may not get back the amount invested. Changes in rates of foreign exchange may cause the value of investments to go up or down. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. The internal rates of return or IRRs presented on a gross basis do not reflect any management fees, carried interest, taxes and allocable expenses of the kind that will be borne by investors in a fund, which in the aggregate may be substantial. Statements contained in this Presentation that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Skybound. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. In addition, this Presentation contains forward-looking statements. Actual events or results or the actual performance of the Fund the Fund may differ materially from those reflected or contemplated in such forward-looking statements. Certain economic and market information contained herein has been obtained from published sources prepared by third parties and in certain cases has not been updated through the date hereof. While such sources are believed to be reliable, neither Skybound nor any of its directors, partners, members, officers or employees, agents or advisor or any other person assumes any responsibility for the accuracy or completeness of such information. No person, especially those who do not have professional experience in matters relating to investments, must rely on the contents of this Presentation. If you are in any doubt as to the matters contained in this Presentation you should seek independent advice where necessary. This Presentation has not been submitted to or approved by the securities regulatory authority in any state or jurisdiction. Except for Skybound and certain other identified representatives of the Fund, no person has or will be authorised to give any information or representation relating to this Presentation. This document does not constitute a solicitation, invitation or investment recommendation, and before selecting a financial product or fund. We recommended that investors seek specialised financial, legal and tax advice. There is no assurance that the investment objective of the Fund or any other cell is achievable. Investments in the Fund will be on the terms set out in the Fund s Offering Memorandum and Constitution. The content of this Presentation has not been independently verified nor has it, from a UK perspective, been approved by an authorised person, within the meaning of the UK Financial Services and Markets Act 2000 ( FSMA ), as amended. As an unregulated collective investment scheme, distribution and promotion of Interests in the Fund are restricted for the purposes of section 21 and 238 of FSMA to persons who are Qualifying Investors, being persons who are investment professionals within the meaning of Article 19(5) of the FSMA (Financial Promotion) Order 2005, as amended ( FPO ) or Article 14(5) of the FSMA (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, as amended ( SPO ), sophisticated investors within the meaning of Article 50 of the FPO or Article 23 of the SPO and high net worth companies, unincorporated associations etc. falling within Article 49(2)(1) to (d) of the FPO or Article 22(2)(a) to (d) of the SPO. Where the content of this Presentation is approved by an authorised person, within the meaning of the FSMA ( Authorised Person ), Qualifying Investors also include eligible counterparties and professional clients within the meaning of chapter 3 of Conduct of Business Sourcebook ( COBS ) of the FCA Handbook made by the UK Financial Conduct Authority ( FCA ), certain persons which are exempt from the FSMA prohibition on carrying any regulated activity in the UK without being authorised to do so by the FCA (other than appointed representatives provided the Presentation relates to a regulated activity in respect of which they are exempt), certified sophisticated investors, certified high net worth investors and self-certified sophisticated investors, in each case within the meaning of COBS 4.12 for whom the Authorised Person considers that an investment in the Fund is likely to be suitable based on a preliminary assessment of these investors profile and objectives. Skybound is not authorised to carry on investment business in the UK, and potential investors are advised that all, or most, of the protections afforded by the UK regulatory system, will not apply to any investment in the Fund. This Presentation is not for distribution to retail customers. InHong Kong, the document is directed only at Professional Investors (as defined under applicable regulations) and not intended for, and should not be used by, non-professional Investors. PLEASE NOTE This document is used for marketing purposes only and is, therefore, more general in nature. For more detail and accurate information relating to the Fund please info@skyboundcapital.com or speak to one of the team members directly.

18 Contact Us UNITED KINGDOM 3rd floor, 33 Bruton Street, London, W1J 6QU Tel: Skybound Capital (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the United Kingdom (No ) HONG KONG 21/F, Chuang s Tower, Connaught Road Central, Central, Hong Kong Tel: Skybound Capital (HK) Ltd has a Type 9 Asset Management License from the Securities and Futures Commission of Hong Kong (No. AXR396) MAURITIUS 2 nd floor, Block B, Ruisseau Creole Offices, La Mivoie, Riviere Noire, Mauritius Tel: Skybound Capital Limited has a GBL1 License, a CIS Manager License and an Investment Advisor (Unrestricted) License under the Financial Services Commission in Mauritius (No. C ) BERMUDA c/o Cohort Limited, 41 Cedar Avenue, 5th Floor, Hamilton Bermuda HM12 Skybound Capital (Bermuda) Ltd BMA Number FIST03462 Tel: SOUTH AFRICA Cape Town 7 th floor, Letterstedt House, cnr. Main & Campground Roads, Newlands, 7700 Tel: Skybound Capital (Pty) Ltd has a Category I, II and IIA License from the Financial Services Board in South Africa (No ) SOUTH AFRICA Durban 04 Palm Boulevard, 2A West Palm, Gateway, 4321 Skybound Capital (Pty) Ltd has a Category I, II and IIA License from the Financial Services Board in South Africa (No ) SOUTH AFRICA Johannesburg Commerce Square, 1st floor, Building 2, 39 Rivonia Rd, Sandhurst, 2196, Johannesburg, 2196 Skybound Capital (Pty) Ltd has a Category I, II and IIA License from the Financial Services Board in South Africa (No ) SOUTH AFRICA Port Elizabeth 7 Westbourne Road, Richmond Hill, Port Elizabeth, 6001 Skybound Capital (Pty) Ltd has a Category I, II and IIA License from the Financial Services Board in South Africa (No ) info@skyboundcapital.com