Weak payrolls and then Brexit
There was no shortage of Headlines in Quarter 2 of 2016. During the quarter there was a far weaker than expected May payroll number out of the US which was followed by the now famous Brexit vote. Markets adjusted sharply to these two unexpected events with gold and low risk bonds repricing upwards. Locally in South Africa the negative political stories were drowned out by these international stories and by comparison South Africa seemed an unlikely stable place to be.
Continue to outperform
As at the end of July the JSE Top 40 returned an unflattering year to date 0.5% while the overall JSE was up 5.5% (including dividends). This was mainly as a result of the stronger ZAR which regained 13% against the USD from the lows experienced at the beginning of the year. At Courtney Capital we reduced our risk exposures during Q2 and were able to maintain our outperformance.
Local elections and the road ahead
Looking forward the trading environment remains volatile with the market expecting continued support from the worlds largest central banks. Locally we look forward to further improved confidence levels in South Africa following the successful local elections. Thereafter the focus will shift again to whether South African bonds are downgraded by the ratings agencies in December. We remain vigilant as trading opportunities will become apparent in this uncertain environment.
The Courtney Capital Team