Markets love certainty, and a year-end rally
In our last feedback letter we spoke of the 3 big uncertain events weighing on the market in Q4 2016 (the US election, the US interest rate hike and the SA debt ratings announcement). Well now we know Trump was elected president, the US rates went up by 0.25% and SA avoided a debt rating downgrade. Then the market rallied and the JSE somewhat recovered from what was a poor year for stock market returns.
The year that was
The JSE Top 40 ended the year down 1.6% (including dividends) after being down 4.5% during the quarter. Perhaps not that bad in a year that witnessed a surprise Brexit, Trump, threats to Finance Minister Gordhan, Italy referendum, China worries, and so on. We at Courtney Capital are pleased that we again delivered an inflation beating return and significantly outperformed the index in a difficult trading environment.
The outlook for 2017
Unfortunately it is likely to be another difficult year. But then when is it ever easy. We expect to see some recovery in the local economy and perhaps even room for an interest rate cut later in the year. The ZAR has already strengthened relative to Developed Market currencies and could remain at these levels for the year. In an environment where growth is low and uncertain our focus will be on trading strategies and any mispricing opportunities, an advantage which is not available to asset managers who manage large long only funds.
A happy new year
Lastly we wish all of our clients a successful and happy New Year. As always we thank you for your loyalty and support.
The Courtney Capital Team