Market and Economic Charts Retail Fund Management Team Investec Asset Management 30 April 2010
Looking at Markets Global SA Economics Major Index Performance Major Index Performance Market Drivers Inflation Interest Rates Currency Commodities Page 2
Equity Markets
Global equities extending their gains from MSCI World Index (in US$) (1198.2) 1800 1600 1400 1200-50.6% 1000-27.5% 74.0% 800 23.1% 600 Feb-10 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Mar-10 Apr-10 Page 4
Strong rebound from the March lows due to optimism of a global economic recovery S&P 500 (in US$) (1186.7) 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 5
Strong rebound from March lows due to optimism of a global economic recovery FTSE 100 (in GBP) (5553.3) 6800 6300 5800 5300 4800 4300 3800 3300 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 6
Japanese equities remain at significantly higher levels than seen in March Nikkei 225 (in Yen) (11057.4) 20000 18000 16000 14000 12000 10000 8000 6000 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 7
FTSE/JSE Africa All Share more than 150% up in US$ since the beginning of March MSCI World Index (in US$) (461.4) & FTSE/JSE All Share Index (in US$) (733.0) 1000 900 800 700 600 500 400 300 200 100 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 FTSE/JSE Africa All Share US$ Morgan Stanley World Index US$ Page 8
A significant recovery in local equities since March The FTSE/JSE All Share Index (in ZAR) (28635.8) 35000 33000 31000 29000 27000 25000 23000-45.4% 57.8% 21000 19000 17000 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 9
Domestic equities have a high correlation to the performance of global emerging markets FTSE/JSE All Share Index (in US$) (3879.8) & MSCI Emerging Markets Index (in US$) (1020.0) 5000 1400 4500 4000 3500 1200 1000 3000 2500 2000 800 600 1500 1000 500 400 200 1997 1998 1999 2000 2001 2002 2010 FTSE/JSE All Share Index (US$) MSCI Emerging Markets Index (US$) Page 10
Domestic equities have a high correlation to the performance of commodity prices, especially copper FTSE/JSE All Share Index (in US$) (3879.8) & Copper Price (US$) (7365 / ton) 5000 9000 4500 4000 3500 3000 2500 2000 1500 1000 8000 7000 6000 5000 4000 3000 2000 500 1000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 FTSE/JSE All Share Index (US$) Copper Price (US$) Page 11
Significant sector rotation from resources to financials since January 2010 SA Equities: sector performances relative to the FTSE/JSE All Share Index 115 110 105 100 Performance relative to the ALSI: Financials: 2.8% Industrials: -0.1% Resources: -1.4% 95 90 85 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 FTSE/JSE All Share Index Financials relative to ALSI Industrials relative to ALSI Resources relative to ALSI Page 12
The PE ratio is back above one standard deviation to the average (since 1990) The FTSE/JSE All Share PE ratio (17.5x) 20 18 16 14 12 10 Mean: 14.41 Std Dev: 2.55 8 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 13
The market will be looking for a sharp recovery in earnings growth to support current share prices SA earnings growth (% change yoy) (-22.26%) & FTSE/JSE All Share Index (28635.8) 50 32000 40 30 27000 20 10 22000 0-10 17000-20 12000-30 -40 7000 2001 2002 2010 SA Earnings Growth (yoy) FTSE/JSE All Share Index adjusted Page 14
Foreigners remain strong net buyers of SA equities in 2010 Foreign net purchases of SA equities in April 2010 (in ZAR) 15000000 10000000 5000000 0-5000000 -10000000-15000000 -20000000-25000000 -30000000 2001 2002 2010 Page 15
Economic Developments
Leading indicators point to above-trend growth in 2010 Developed market economic expectations (G7 leading indicator 12 month % change, 13.8%) 14 12 10 8 6 4 2 0-2 -4-6 -8-10 -12 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 17
US manufacturing enjoying a strong recovery with the US ISM remaining above 50 US Institute for Supply Management Index (59.6) 72 67 Expansionary 62 57 52 47 42 37 Contraction 32 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 18
Developed economies inflation rebounding from very low levels Developed market inflation: USA (2.4%), UK (3.0%), Euro (1.5%) 12 10 8 6 4 2 0-2 -4 1982 1983 1984 1985 1986 1987 19888 19899 1990 1991 1992 1993 1994 1995 1996 1997 1998 19999 20000 2001 20022 20100 USA Inflation Rate % UK Inflation Rate % Europe Inflation Rate % Page 19
Developed economies interest rates remain at depressed levels to stimulate growth Developed market short-term interest rates: UK (Clearing bank rate, 0.50%), US (Fed funds rate, 0.25%), EU (repo rate, 1.00%) 6 5 4 3 2 1 0 UK Clearning Banks Base Rate US Fed Funds Rate Euro Zone Repo Rate Page 20
Developed market bond yields moving sideways at relatively low levels Developed market 10 year government bond yields: USA (3.7%), UK (3.9%) & Germany (3.0%) 600 6.00 5.50 500 5.00 4.50 400 4.00 3.50 300 3.00 2.50 200 2.00 USA Government 10 year bond UK Government 10 year bond Germany Government 10 year bond Page 21
The US$ has gained ground after 18 months of significant depreciation against the Euro US Euro exchange rate ($1.33 / Euro) 1.6 1.5 1.4 1.3 1.2 1.1 1 Page 22
Emerging market bond spreads narrowing on the back of global optimism, but still above levels Emerging market government bond spreads relative to US government bonds (JP Morgan EMBI spread) (265 bps) 1200 1000 800 600 400 200 0 2001 2002 2010 Page 23
Growth expected to accelerate from here on Quarter on Quarter (QoQ) and Year on Year (YoY) % change in GDP 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Forecasted figures 10% 0% -10% Mar-82 Mar-84 Mar-86 Mar-88 Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 QoQ YoY Source: Investec Asset Management Page 24
SA interest rates expected to remain stable at low levels: headline inflation back within the SARB inflation band SA inflation & repo interest rate 14% CPI 17.5% 13% 16.5% 12% Repo 15.5% 11% 14.5% 10% 13.5% 9% 12.5% 8% 11.5% 7% 10.5% 6% 9.5% 5% 8.5% 4% 7.5% 3% 6.5% Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-0 Dec-1 0 1 2 3 4 5 6 7 8 9 0 Source: Investec Asset Management Page 25
SA bond yields rallied on the back of the surprise March 2010 rate cut Yield on government bond R207 (8.57%) 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan-2010 Mar-2010 Page 26
Significant turnaround in domestic equities, fuelled partly by declining domestic interest rates Prime overdraft rate SA (10.0%) & FTSE/JSE All Share rolling 12 month % change (+38.7%) 120 100 80 60 40 20 0-20 -40 27 25 23 21 19 17 15 13 11 9 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 27
Rand benefiting from foreign inflows and an improving global outlook as global investors continue to allocate capital towards riskier assets Rand US Dollar exchange rate (R7.4 / US$) 12.00 11.00 10.00 9.00 8.00 7.00 6.00 5.00 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 28
Rand / Euro following a similar pattern Rand Euro exchange rate (R9.8 / Euro) 15.00 500 14.00 13.00 12.00 11.00 10.00 9.00 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 29
Rand / Pound following a similar pattern Rand Pound exchange rate (R11.3 / Pound) 18.00 800 17.00 16.00 15.00 14.00 13.00 12.00 11.00 10.00 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Page 30
Rand remains strong in real terms against all primary trading partners SA Rand real trade weighted index (107.9) 130 120 110 100 90 80 70 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 31
Commodities: Significant recovery after sharp correction The Economist Metals Index (257.7) 365 315 265 215 165 115 65 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 32
US$ Gold price well supported above the $1000 / ounce level US Dollar gold ($1148.6 / ounce) 1200 1100 1000 900 800 700 600 500 400 300 200 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 33
Despite US$ gold breaking above the $1000 / ounce level, rand gold price not yet fully recovered Gold price in SA Rand terms (R8477.4 / ounce) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 34
The extent of the global recovery will determine further demand for platinum (in US$) Platinum price in US Dollar ($1726.0.0 / ounce) 2300 2100 1900 1700 1500 1300 1100 900 700 500 300 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 35
The extent of the global recovery will determine further demand for platinum (in Rand) Platinum price in SA Rand terms (R12739.3 / ounce) 17000 15000 13000 11000 9000 7000 5000 3000 1000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2010 Page 36
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