The SA economy contracted by 0.6% in 3Q19, after growing by 3.1% in the second quarter of the year and shrinking by 3.2% in the first quarter. Eskom shocked the nation by implementing stage 6 load shedding for the first time in history, not boding well for economic growth in the short to medium term. But December 2019 served to prove that no matter what the domestic situation, a globally accommodating environment will strengthen the rand. Thus, we saw the rand appreciate by 4.7% against the US dollar, as the phase one trade deal between China and the US helped catalyse a rally in emerging market stocks and currencies. SA government bonds benefited from the EM rally as the benchmark R186 government bond yields dropped 0.2% during the month to end the year at 8.3%, an impressive real yield given Stats SA’s announcement of a decade-low 3.6% inflation rate during the month.

For the year 2019, the ALSI and ALBI gained 12.1% and 10.3% respectively. SA listed property returned 1.9% and cash returned 7.3%. The MSCI World Index rewarded South African investors with a lucrative 24.1% total return in rand terms. The rand strengthened by 2.7% against the greenback. Platinum shares were again leading the way, up another 20% the month to cap a year in which their share prices tripled, Impala Platinum and Northam Platinum returned a staggering 291% and 186% in 2019 respectively, which bode well for the fund. SA Property shares had another forgettable year, returning a meagre total return of 1.9% including 9% of dividends. Valuers have started adjusting assumptions on future market rental growth downwards across all sectors, which has led to write-downs in property valuations. There is a risk of further write-downs given weak property fundamentals and limited transactional evidence, hence the fund remains underweight local property.