MEETING PURPOSE
Our investment team aim to meet every week to discuss the macro environment and how this could impact our current and future portfolio construction.
KEY TAKEAWAYS
- US equity markets and earnings growth continue to outperform other regions, driven by tech/AI stocks
- Commodity markets, especially metals like platinum and palladium, showing strength
- South African equity markets have performed well since May 2024 elections, with significant divergence between sectors
- Active managers have generally struggled to outperform broad market indices over the past year
TOPICS
Currency and Fixed Income Markets
- Dollar index (DXY) around 97.60, weakening trend
- Euro breaking bullish against Dollar
- US 30-year bonds (TLT) vulnerably poised, other bonds bullish
- Fixed income returns lagging equities year-to-date
Equity Markets
- MSCI World and other major indices breaking bullish
- US equity markets leading, especially large-cap growth/tech stocks
- Emerging markets showing strength, especially Africa
- European aerospace & defense sector up 400% since Oct 2022
- Significant divergence in SA equity sector performance (e.g. financials vs resources)
Commodity Markets
- Industrial metals index close to breaking out
- Gold and silver looking bullish
- Platinum and palladium showing strength, surging, up 65-68% in Q2
- Oil trading between $60-80, refinery capacity issues globally
Investment Performance Review
- MitonOptimal’s Active Beta Fund performing well year to date, benefiting from Rand hedging
- Most buy-list SA equity and balanced fund managers outperforming benchmarks
- Hedge fund strategies showing mixed results compared to long-only funds
Economic Outlook
- Fiscal stimulus supportive in US, Germany, Japan, China
- US corporate earnings growth expectations remain strong
- Concerns about China’s economic growth revival
Next Steps
- Continue monitoring US vs non-US equity performance divergence
- Assess implications of commodity price trends, especially PGMs
- Review SA equity allocations given recent outperformance
The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness.3