The Absa International Fund will change it's name to Absa Global Value Feeder Fund, effective from 12 December 2015

The third quarter of 2015 was the weakest in four years as investor sentiment buckled under concerns over China's economic strength and the allied market rout which culminated in a devaluation of the currency. Further weighing on sentiment has been the prospect of a hike in US interest rates, although this may well not happen in this calendar year. Plunging commodity prices have wrought havoc in emerging markets, with most EM currencies weakening significantly over the quarter. With most equity markets declining over the quarter, it is no surprise that the MSCI World Index delivered a negative total return of 8.3% for the same period, bringing the total return for the year to date to -5.3%.

Interest rates in most developed markets have continued to rise from their historical lows, but still remain at very low levels. Tepid global growth and the absence of inflationary pressures in most regions means that the hiking cycle, when it comes, is likely to be a fairly shallow one. Developing markets, however, may have to raise rates more aggressively if a repetition of the "taper tantrum" results in a flight of capital from these markets as was evidenced in mid-2013.

Following the recent decline in prices, equity valuations are less stretched, although they are by no means cheap. However, as growth gains traction in the USA, and the euro zone and Japan enjoy the stimulus provided by central banks, opportunities will arise and careful stock selection should still be able to provide acceptable returns going forward.

The first quarter of 2015 was generally a good one for equity markets as the MSCI World Index provided a total return of 2.4% in USD terms. For a change, markets were led not by the USA, but by the euro zone, which returned over 3% in USD terms. While corporate USA has had to deal with the headwinds to earnings caused by a strong Dollar, the euro zone, and Germany in particular, has been boosted by the weak euro and the fillip this provides to exports. The region has also reacted positively to the quantitative easing program put in place by the European Central Bank. Emerging markets, too, have been impacted by Dollar strength, with many emerging market currencies declining sharply, bringing the risk of inflation. Growth in China may well move below the 7% level targeted by the authorities, while the picture in Russia and Latin America is not pretty.

The USA has ended its bond buying program and the next move in interest rates in that country will be upward. The timing of this move is, however, extremely uncertain. While the Federal Reserve has opened the door to start raising rates from as early as June 2015, recent weakness in employment data, among other factors, is likely to result in this hike being pushed out a little further. When this cycle does start, it will surely draw capital away from emerging markets and is likely to increase volatility in capital markets.

After a lengthy period of good performance, valuations of global equities are not cheap. However, as growth gains traction in the USA, and the euro zone and Japan enjoy the stimulus provided by central banks, opportunities will arise and careful stock selection should still be able to provide acceptable returns going forward

The second quarter of 2015 started on a positive note with global equity markets generally rising on the back of a benign landscape. In late May, however, markets turned sharply down, driven by concerns over Greece and its continued participation in the Eurozone, as well as the expression of the view by numerous commentators that Chinese equities were in a "bubble". These worries were vindicated as Greece effectively defaulted by missing a loan repayment to the ECB at the end of June, while Chinese equity markets went into freefall and continued this downward trend into July. US markets have been in a holding pattern recently as investors grapple with the likely timing and extent of the looming interest rate hikes broadcast by the Federal Reserve. All of these uncertainties resulted in a meagre total return on the MSCI World Index (in USD terms) of just 0.5% for the second quarter and 3.0% for the first half of 2015.

Interest rates in most developed markets have risen from their historical lows, but still remain at artificially low levels. While the Fed has stated that it will start to raise interest rates, tepid global growth and the absence of inflationary pressures in most regions means that the hiking cycle is likely to be a fairly shallow one. Developing markets, however, may have to raise rates more aggressively if a repetition of the "taper tantrum" results in a flight of capital from these markets as was evidenced in mid-2013.

After a lengthy period of good performance, equity valuations are looking a little stretched. However, as growth gains traction in the USA, and the euro zone and Japan enjoy the stimulus provided by central banks, opportunities will arise and careful stock selection should still be able to provide acceptable returns going forward.

The final quarter of 2014 proved to be a volatile one for equity markets, although the MSCI World Index did manage to close the quarter marginally higher than it started, reflecting a total return of 1.1% and bringing the total return for the year to 5.5%, both in USD terms. The stand-out event during the quarter was the collapse in the price of oil. Having started the quarter at a price of $94.74, the barrel price of Brent had fallen to $57.33 by 31 December 2014 and has fallen below $50.00 in 2015. The impact of this decline has both positive and negative effects. While consumer demand should be boosted and inflationary pressures eased, the euro zone is already staring deflation in the face, a problem which will now be exacerbated. Countries relying on oil for revenue and exports will clearly bear the brunt of lower prices, particularly those countries facing other problems as well, such as Russia and Nigeria. Geopolitical tension is likely to remain at elevated levels for the foreseeable future, particularly in light of the recent terror attacks in Paris.

The USA has ended its bond buying program and the next move in interest rates in that country will be upward, although this is not likely to happen before the third quarter of 2015. This will surely draw capital away from emerging markets and is likely to increase volatility in capital markets.

Despite a lengthy period of good performance, valuations of global equities do not appear stretched and careful stock selection should still be able to provide acceptable returns going forward.