Dear Client
January rally
The year started without the famed “January rally” and continued in a similar way to 2015 characterized by volatility and large currency movements. South Africa was to an extend caught up in the Global currency fluctuations with Emerging Market countries increasing interest rates to protect their currencies while developed market countries try to devalue their currencies with low and in some cases negative interest rates.
Commodity bounce and a stronger rand
Then came the bounce in commodity prices and the resource shares which were heavily sold off in 2015. Later in the quarter the financials and retail stocks rose as the South African ZAR strengthened, which in turn put pressure back onto the companies that have offshore exposure. This resulted in a 2016 quarter 1 performance for the Top 40 shares of 0.75% and the JSE All Share index up 3.07%.
Well-positioned
At Courtney capital we remained well positioned to benefit from this market volatility. Our trading strategies meant that we were able to participate in the bounce in the resource shares and later in the quarter our investment in property share Attaq paid off after reporting a further increase in NAV as their Waterfall development continues to progress. Given the low performance of the overall market we are pleased with our relative out-performance.
Looking ahead
Looking to the next quarter it seems that currency movements will continue to be the biggest factor in determining the pricing of our market. We see opportunities in a few shares that have been oversold in these roller coaster markets and will take short term opportunities as they present themselves.
The Courtney Capital Team
April 2015