The JSE All Share Index gained around 1.04% in the month of September and is trading in record territory, supported by views that global central bankers are finally taking decisive action to tackle the various issues impeding world growth. We saw an appetite for resources re-emerge, with the resource index rising 4.7%.

Despite the best efforts by various authorities around the world to stimulate growth, the outlook remains uncertain. Members of the European Union are displaying anything but solidarity about policies to solve the debt crisis in the region, the Chinese economy is decelerating faster than forecast and, amongst other things, the US is battling with high unemployment, falling home prices and mandatory budget cuts. In South Africa, illegal strike action in the mining industry is destabilising the economy and threatening its international credit rating.

Nonetheless the world is still expanding, albeit at a slower pace, with the developing economies like China, India and Russia the major contributors to growth. Africa, too, has little exposure to the problems plaguing the rest of the world and is showing signs of increased business and industrial activity. We continue to be wary of the unsecured lending sector, and with this in mind, have eased out of our position in Capitec. During the month, both Sasol and Imperial released stellar results and we continue to favour our exposure to these counters.

During the month the IMF reduced global growth forecast for this year and for 2013. According to the IMF the most prominent risk to the global recovery lies in the euro area. Insufficient policy action may lead to further escalation of the crisis. This can already be seen in the recent deterioration of the sovereign debt markets.

The weaker growth in developed countries added further pressure to global growth estimates.

China's economic growth in the first half of this year slowed to 7.6%, the weakest level since 2009. Although emerging market growth is coming in lower than estimated, corporates continue to increase sales across these regions, albeit at a slower pace.

Turning our attention to South Africa, the Reserve Bank's Monetary Policy Committee surprised the market by cutting the repo rate to 5%. With the economic environment deteriorating, and the Reserve Bank's own inflation outlook improving, the MPC was proactive in cutting interest rates to the lowest level since 1973.

As interest rates remain at low levels, we continue to strongly favour the equity market.

Global trade is expected to slow, triggered by the EU's recession and moderately slower emerging market economic growth. SA's economic growth is likely to be muted in 2012 with no major cyclical turns in either consumption or investment. China has lowered its growth target for 2012 from 8.0% to 7.5%. The rising base effects make persistent high GDP growth rates less likely in the medium term, especially with lower trade activity in Europe. The forecast change is unlikely to change the physical demand pattern, but is expected to weaken sentiment toward industrial commodities.

We see softness but not a collapse in international commodity prices in 2012 due to the slowing global growth. Emerging market economic growth is expected to remain relatively robust due to continued domestic consumption and investment growth supported by easier monetary policy.

Global equity markets, especially emerging equity markets and commodity markets have high correlations at present. The reason for this is that developed market investors are looking for yield and there is commonality in moving in or out of the USD. Most developed economy governments are heavily laden with debt, have minimal fiscal flexibility and massive contingent liabilities in the .form of entitlements.

Large companies domiciled in developed economies have very strong balance sheets, with ambitions that are progressively moving beyond their domestic borders resulting in a growing portion of their earnings being generated outside home markets. These companies are following the globalisation trend using strong, well-recognised brands. This means that selective exposure to global equities remains worthwhile because of attractive income yields and the potential for capital gain.

The year 2012 is beginning with the spectre of the Euro zone debt crisis still dominating the environment. In light of the high correlation between South Africa's economic growth and that of the world economy, global economic events are set to continue being the principal determinant of the likely domestic economic growth outcome in 2012.

In Europe itself, a mild recession without doubt is on the cards. The sovereign debt crisis not only in Europe, but lurking behind this in the United States as well, is likely to continue forcing governments of advanced economies to restrict growth in government expenditure and to adopt austerity measures, which are bound to dampen economic growth. Consequently, one foresees extremely sluggish growth through 2012 in not only advanced economies, but also permeating key emerging markets, including South Africa.

As a result, it is likely that economic growth domestically in 2012 will at best attain the modest levels reached in 2011 and at worst could see very little growth being achieved at all. On the other hand, one does not foresee a total economic melt down either.

The prevalence of interest rates at their lowest levels in almost 40 years should continue to provide a level of support preventing economic growth from imploding completely. In any case, not only internationally, but in South Africa as well, the corporate world is a wash with liquidity, reluctant to invest due to uncertainty and a lack of confidence about the economic outlook.

In this kind of environment, we will focus our investments on financially sound blue chip companies, with strong balance sheets supported by a decent yield.

The JSE All Share Index lost 4.29% during September, a move from 31,005 to 29,674. The sharp sell off came after the IMF cut its global growth forecasts for 2011 to 4% in addition to the head of the World Bank warning that the world economy was entering a 'danger zone'. Investors fled to the safety of US Treasuries. Emerging market currencies, including the Rand, tumbled as the dollar strengthened.

Shortly after, the Federal Reserve announced new measures to bolster the US economy. Operation Twist is designed to lower yields on long-term bonds while keeping short-term rates relatively unchanged.

The intent is to push down interest rates on everything from mortgages to business loans, giving consumers and companies an additional incentive to borrow and spend money.

The JSE All Share has moved back up to around 30,900 (+4%) trending in line with global markets, as improved US macro data and support for ailing Euro zone banks lifted sentiment, even after ratings agency Fitch had downgraded Spain and Italy. Locally, as expected the Reserve Bank's Monetary Policy Committee left the repo rate unchanged at 5.5%. The MPC highlighted that downside risks to the growth outlook had increased largely due to uncertainty in the developed economies.

Global financial markets continue to be burdened with concerns regarding the outlook for the world economy, with each news flash prompting a reassessment of the situation. Encouraging statements from EU officials regarding their capitalization of bank stemmed the decline in equity markets, although no concrete plans have been announced. In this type of environment, we hold our investment universe of financially sound blue chip equities with solid balance sheets, strong cash flow generation and sound business prospects.