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OIG Monthly Market Review


Data released by Refinitiv, shows that the JSE All Share Index (ALSI) has gained, on average 0.89% in February since 1995.The best February for the ALSI since 1995 was in 2012, when the index gained 7.35%. Other strong February figures include 1995 (+6.29%) and 2003 (+5.26%). The worst February for the ALSI since 1995 was in 2018, when the index lost 4.87%.

Despite a relatively favourable month for equities dedicated to the domestic economy (banks +2% MoM, insurers +5% MoM), the JSE ended February lower (FTSE/JSE Capped SWIX -2.3% MoM), with the exclusion of retailers (general- and discretionary retailers -5% MoM). The largest strain on the local exchange was caused by the mining industry (-12% MoM), weighed down by overall weaker commodity prices (aluminium -10% MoM, gold -5% MoM, platinum -6% MoM and iron ore -1% MoM).

In February, Naspers and Prosus were also down on the JSE (-3% MoM in aggregate), however they outperformed their biggest investment, Chinese tech powerhouse Tencent (-12% MoM). This was due, at least in part, to the impact of a weaker local currency, with the rand sliding by 5.2% MoM against the US dollar, bringing its YTD decline to 7.2%, among the major currencies. Only the Argentine peso has fared worse.

On Monday, 6 March, President Cyril Ramaphosa announced that Dr Kgosientsho Ramokgopa will take up the new position of Minister of Electricity in the Presidency. The original structures remain intact, which – according to the Democratic Alliance - will fragment the handling of the electricity crisis among four ministries: Minerals and Energy; Public Enterprises; Cooperative Governance and Traditional Affairs; and the Minister of Electricity in the Presidency. The DA expects this increase pressure on the taxpayers. The Department of Public Enterprises, under Minister Pravin Gordhan, will remain to supervise the unbundling of Eskom, while general energy implementation will be dealt with by the Department of Mineral Resources and Energy under Minister Gwede Mantashe. Harmful reports of systemic and organised corruption at Eskom are likely to prompt more scrutiny of the President’s recent Cabinet reshuffle.

On 22 February Finance Minister Enoch Godongwana presented an appropriate budget, considering the restrictions. The government's fiscal position has actually improved on higher-than-expected revenues (R93.7-bn) but government debt is now predicted to peak at around 73.6% of GDP in 2025/6, much more and later than formerly announced, because of government’s taking on R254-bn of Eskom’s debt.

Relief came in the form of a two-year extension of the diesel fuel levy refund to food manufactures. Over the next two years, companies may decrease their taxable income by 125% of the value of the investment into renewable energy developments. A tax rebate to individuals for 25% of the cost of solar photovoltaic panels will also be offered from 1 March 2023 to 29 February 2024, subject to specific conditions, capped at R15 000 per person. The Covid-19 Social Relief of Distress Grant has been prolonged until 31 March 2024.

The Financial Action Task Force (FATF) has placed South Africa on its grey list. This classification system is an inter-governmental focus intended to curb money laundering and terrorist financing by improved monitoring of higher-risk jurisdictions. Other countries on the grey list include known tax havens such as the Cayman Islands and Panama and high conflict or war zones such as Syria, Mali and Mozambique. Being removed from the grey list will involve more legislation, investigative funding and the effective prosecution of financial crimes.

For January 2023, the year-over-year inflation rate was 7.2%. This includes energy, 10.9% and food 13.6%.


Global markets lost pace in February after a good start to the year (MSCI World -2.4% MoM).

Global debt has hit a record high and with rising interest rates, debt servicing has become more difficult.

United States (US)

Historically, February has been a mixed month for market performance, with some years showing strong gains while others have seen significant losses. Some key points on the historic performance of the US stock market in February include: Data released from Yardeni Research show that, on average, the S&P 500, has gained 0.50% in February since 1950. The best February for the S&P 500 since 1950 was in 1991, when the index gained 5.2%. The worst February for the S&P 500 since 1950 was in 2009, when the index lost 10.9%.

US employment and inflation figures have dashed investor hopes that the US Federal Reserve (FED) was nearing the end of its rate hike cycle and would soon begin lowering rates. Data showed that the US added half a million jobs in January - more than double the consensus expectation - and US inflation dropped less than expected. This served as a warning that declaring a FED triumph over inflation may be premature. Interest rate markets are pricing in at least two more FED interest rate hikes in the near future, with a very low probability of any decreases in 2023.

By the end of February, most US corporations had reported 4Q22 earnings, with S&P 500 earnings about 3% lower year on. Large-cap tech companies in the US were among the few strong performers in February, NYSE FANG +3.8% MoM and +23.2% YTD, though with some varied outcomes. Tesla and Facebook parent Meta all had a strong month: +19% and +17% MoM, respectively, while Netflix, Amazon and Google parent, Alphabet, had a difficult month: all down by 9% MoM.

Worries over consumer credit are growing after the FED of New York’s Centre for Micro-economic Data released the most recent figures: consumer credit card balances increased for the fourth quarter of last year - the first time since 1999 - with eight out of every ten consumers identifying inflation as one of their top-three financial concerns.

United Kingdom (UK)

During the month, UK equities performed well, large companies were part of the top performers, and the FTSE 100 index set a new high. The energy, healthcare, and telecommunications sectors led the market.

A lot of market segments with a local focus performed better than projected as it turned out that the UK economy has been more resilient than anticipated. The latest GDP data from the Office for National Statistics disclosed that the UK economy had not contracted in Q4 2022. Thus, by avoiding two consecutive quarters of decrease after the contraction in Q3 2022, the economy avoided a technical recession.

In its most recent quarterly prediction for the country, the Bank of England (BoE) stated still anticipates that the UK would experience a recession later in 2023. Though, it said the dip would be less severe than it had anticipated at its previous forecast made in November, since which time wholesale energy prices have significantly decreased.


In February, equities in the eurozone rose. The financial, industrial, consumer staples, and communication services sectors saw strong performances. Negative returns were reported in real estate, IT, and healthcare.

Despite previous worries about the winter weather, increased oil costs, fuel rationing, and even possible blackouts, the near-term view has become more positive. With oil prices stable, gas prices returning to levels seen before Russia's invasion of Ukraine and current gas storage, reserves are at 65% of annual use across the European Union.

China's economy seems to be opening quickly, which might prompt a resumption of energy imports. Even though several European nations have added more fuel terminals, winter's colder temperatures might indicate that Europe is still not completely out of the woods yet. Despite prior interest rate tightening and declining energy costs, worryingly, the median consumer inflation expectations - as surveyed by the European Central Bank - moved higher to 3% in December.

The European Commission proposed a Green Deal Industrial Strategy in February. This intends to offer support for scaling up the EU's manufacturing capacity for the net-zero technologies and products that will be needed to meet Europe's climate targets.


Japan’s core inflation rate - without volatile food prices - climbed to a 41-year high of 4.2% in January and has surpassed the Bank of Japan’s (BoJ) target for nine uninterrupted months.

The BoJ’s succeeding anticipated governor, Kazuo Ueda, surmised that the joint statement between government and the central bank, delivered in 2013, affirming that the BoJ should achieve 2% inflation at the earliest probable time, need not be reviewed immediately. He also specified that he was in no rush to alter Japan’s ultra-accommodative monetary policy stance, seeing that monetary policy decisions would be subject to the inflation trajectory. He recognised that tighter monetary policy at this time could further slow the economy down. Ueda is likely to take over as leader of the BoJ on 9 April 2023

There has been a rapid recovery in inbound travel and tourism. In January, the proportion of international visitors reached its pre-Covid level of 60%. The Q4 financial reports for domestic companies showed that strong demand lifted revenues of merchants, hotels, and services.

Emerging Markets (EM)

EM equities lagged global equities in February and produced negative returns. Tensions between the US and China rose again, dampening investor morale, but stronger-than-expected macro-economic data from the US increased the likelihood of further rate increases. In this environment, the dollar strengthened, adding to EM's difficulties.

For the first half of this year, it is anticipated that persistently rising inflation, high interest rates, and declining domestic demand will have an impact on the composite. Due to dramatic rises in the cost of food and energy, Eastern Europe, Latin America, and large portions of Africa have experienced increased pressures related to cost of living.

Gordon Loubser-Hattingh

Optimum Investment Group (Pty) Ltd

FSP 43488


While every care and effort has been taken to ensure the accuracy of the information provided, any information shared in this document does not constitute advice as defined in the Financial Advisory and Intermediary Services Act, 2002. It is your responsibility to get professional advice to accompany you with the information read, that will suit your personal circumstances.

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