Globally equity markets went up along with the GDP growth in the developed markets. This in turn pulled up the emerging markets including South African listed equities.
The All-share index returned 8.9% for the quarter with most of the performance attributable to Naspers which was up 15% for the quarter. At Courtney Capital we continued to hold a more diversified portfolio across the rand hedges and local stocks, as well as holding some shorts which penalised our performance slightly in the short term.
Hang on to the hedges
We continued to hold our hedged trades including: Long Barclays Bank (BGA) and Standard Bank (SBK) and short Capitec (CPI) as Capitec is trading at 5.5 times book value vs the sector average of 1.5 times. We added a pair trade long Woolworths (WHL) trading on a price-to-earnings multiple (PE) of 14 and short Clicks (CLS) trading on a PE of 31. We closed our short position in Hyprop as its price decreased in line with lower growth prospects for this property business. We continued to hold our Naspers but have reduced the size of the position relative to the index to reduce risk in the short term.
Slow but steady
This quarter was good for us although we would still prefer more volatility. During the next quarter we should see who the next president of the ANC will be which will remove some uncertainty in the local market. We might also get the downgrade to the SA bond market which is adding downward pressure to the Rand.
We will be meeting with clients during the next two months. If you would like to join one of the sessions please contact Esther.
The Courtney Capital Team