December 2013 will be written in history as the month that South Africa lost its greatest leader, Nelson Mandela. Political leaders from around the world descended onto South African soil and stood side by side to pay tributes to our inspirational hero. Despite the mourning, the domestic financial market continued to steam ahead. The FTSE/JSE All Share Index gained 3.0% as it was lifted by a 4.3% rise in industrial shares. The Index reached an all-time high on 31 December that pushed its 12 month return to 21.4%. Financial shares gained 2.9% and resources shares lagged with a return of 1.8% during the month.

Economic data released during the month was mixed. The Reserve Bank's Quarterly Bulletin for the third quarter indicated that the current account deficit ballooned to a 5 year high of 6.8% of GDP while the trade balance for November recorded its first surplus in a year. A slowdown in domestic demand was reflected by a decline in credit extension as well as vehicle sales that remained flat from a year earlier. The quarterly bulletin also highlighted softening demand conditions and a slowdown in household consumption growth.

The MSCI Global Equity Index returned 2.0% in December and 24.1% for 2013. The S&P 500's 31% return for the year was its best since the financial crisis and its 8th best return since the post-war era. The US equity market also benefitted from reduced uncertainty as Congress struck a budget deal way ahead of the deadline that will see a reduced fiscal drag on the economy next year. Emerging markets did not experience the same type of euphoria as the MSCI Emerging Market Index declined by 1.5% during the month and lost 5% over 2013. Concerns over liquidity in the Chinese banking system once again plagued investors during the month.

The Novare IP Worldwide Flexible Fund returned 2.10% for the month.

The local financial market benefitted from renewed risk appetite that was driven by abundant global liquidity and the news that the US Fed delayed tapering its monthly asset purchases. This was despite lingering industrial action that tarnished South Africa's global image as a reliable exporter and impacted negatively on domestic growth conditions. The strikes in the auto sector was particularly damaging with thousands of cars' in lost production and vehicles sales that declined by 1.5% during the month from levels a year earlier. The excessive wage demands have in some parts been met with aboveinflationary agreements. The Reserve Bank came out with a more hawkish tone at their bi-monthly meeting as they tried to confirm their inflation targeting credibility and to anchor lofty inflation expectations.

The FTSE/JSE All Share Index rose 5.1% during the month. The financial and industrial sectors were the strongest performing sectors with returns of 6.5% respectively. The resources sector gained 2% as it was held back by a firmer currency and weaker commodity prices. The US Fed was like a groundhog that came out of its hole, didn't like what it saw, and retreated. In the process, the Fed caught financial market participants off-guard with the announcement that the tapering of its monthly asset purchases was delayed until data indicated that the economic recovery was more self-sustainable. Recent data confirmed that the housing market was struggling amidst the rapid rise in mortgage rates and that job creation was slowing somewhat. While it is uncertain when the Fed will start to taper, the succession race to replace Ben Bernanke as Fed Chairman next year opened the door for Janet Yellen when Larry Summers withdrew his candidacy. It is expected that the Fed will be more dovish under the helm of Yellen.

The Novare IP Worldwide Flexible Fund returned 4.4% for the month.