Financial markets were mixed in the fourth quarter of 2024, following strong gains in the third quarter. In the domestic market, the All-Share Index declined 2.13%, on the back of a sharp 10.07% sell-off in resources alongside losses of 1.84% and 0.51% in financials and industrials, respectively.

The All-Property Index also fell 0.37% while the All Bond Index gained marginally by 0.43%. Inflation-linked bonds rose 0.83%, even as inflation slowed during the fourth quarter. Meanwhile, short duration instruments continued to benefit from relatively high yields with the SteFI gaining 2.01%.

The fourth-quarter performance of domestic assets reflected global risk off sentiment compounded by underwhelming domestic economic data releases. Global markets were volatile as investors grappled with the prospect of Donald Trump’s second term, following his victory over Vice President Kamala Harris in the general elections held in November.

The Federal Reserve added to the uncertainty by cutting interest rates by 25 basis points in December but maintaining a hawkish outlook on future hikes. Against this backdrop, the MSCI World Index ended 0.41% lower, while the Bloomberg Global Bond Index declined by 5.10%, driven by rising bond yields. Nonetheless, the rand depreciated by 9.33% during the quarter, cushioning investors against offshore losses.

The 27four Stable Fund gained 2.42%, outperforming the low-equity portfolio category average by 75 basis points. The fund's outperformance in the fourth quarter was driven by overweight positions in global equities and a defensive bias on the domestic side. It also benefited from strong performance from most of its underlying managers.

The fourth quarter of 2024 was disappointing, especially for South Africa, marked by negative GDP growth, volatile manufacturing data, and inconsistent mining output despite hopes of recovery under the Government of National Unity. Globally, emerging markets struggled, with China’s slowing economy playing a significant role. Concerns were further fuelled by U.S.

President-elect Donald Trump’s proposed policies, particularly the tariffs against China. As 2025 begins, caution prevails in global markets, particularly in the bond sector, due to anticipated policy changes under the new U.S. administration.

Market conditions will be closely monitored, with adjustments to allocations as needed to navigate uncertainties. The portfolio has remained consistent in adhering to its policy objective.