Mixed economic data coming out of the US, signs of slowing economic activity in China and the continuing Eurozone debt impasse reinvigorated market's concerns over global growth. The risk-off trade that ensued resulted in global currencies weakening significantly against the US dollar due to its perceived safe haven status - emerging market currencies were the hardest hit. These events led to an indiscriminate selloff in global equity markets. Emerging markets sold off harder, with MSCI emerging markets (-8.8%) underperforming the MSCI developed markets (-4.9%) by 3.9% over the quarter. Within the emerging markets Brazil (-23.8%), Russia (-14.0%), Morocco (-13.1%) and India (-9.5%) were the hardest hit while the best performers were the Philippines (+4.1%) and Turkey (+1.3%). Within the developed markets Europe was the hardest hit followed by Asia Pacific while North America held up well for the quarter.

On a relative basis our local markets weathered the storm relatively well in the second quarter of 2012. The FTSE/JSE All Share Index (ALSI) rose 0.5% in rand terms (+1% total return) reaching a new record high of 34 788 points during the quarter. In US dollars (USD), the ALSI fell 5.5% as the rand weakened 6% against the USD. The best-performing economic group for this past quarter was healthcare (+10.9%) and the worst oil & gas (-6.1 %). Among the sub-sectors, healthcare equipment (+15.4%), real estate development (+12.2%), travel & leisure (+11.0%) and food & drug retailers (+9.2%) were the best performers, while worst performing sectors included fixed line telecoms (-20.9%), platinum (-11.9%), construction & materials (-11.3%) and household goods (-10.4%).

We believe that our investment philosophy and process will be generating competitive performance for our clients on a sustained basis in the long term.

US economic data continued to show signs of improvement in the world's largest economy - the fourth quarter 2011 gross domestic product (GDP) numbers were revised upwards, the non-farm payrolls grew strongly, the unemployment rate fell marginally, consumer sentiment improved and the manufacturing production remained flat. There were renewed concerns about China's growth prospects as the Chinese government revised down 2012 GDP growth from 8% to 7.5%.

In Europe, Greece concluded the much-anticipated debt swap deal that saw it avert outright default. These developments had a positive impact on global equities. Emerging markets (14.1%) led the pack outperforming developed markets (11.7%) for the quarter. The excellent performance from emerging markets was driven by Turkey (+27.1%), India (+20.1%), Russia (+18.6%) and Brazil (+16.2%) (all in US dollars). Notably excellent performers within the developed markets were Germany, North America and Asia Pacific.

The local markets performed well in the first quarter of 2012. The FTSE/JSE All Share Index (ALSI) rose 6% in rand terms. In US dollars (USD), the ALSI rose 11.6% as the rand strengthened 5.3% against the USD during the quarter. The best performing economic group during the period was industrials (+18.2%) and the worst was oil & gas (-3.9%). Among the sub-sectors, industrial engineering (+36.2%), technology hardware & parts (+30.4%), industrial transportation (+24.4%) and forestry & paper (+23.8%) were the best performing, while worst performing sectors included fixed line telecoms (-17.4%), gold (-14.9%), platinum (-4.3%) and general mining (-0.1%). We believe that our investment philosophy and process will continue to deliver performance for our clients.

European debt woes and the resulting political impasse continued to drive global market sentiment in December 2011. The US economy continued to recover, albeit at a slow pace. Chinese inflation and manufacturing production slowed, raising hopes of rates easing in the new year. Emerging markets continued to underperform the developed markets - the MSCI Emerging Markets fell 1.2% while the MSCI Developed Markets were flat for the month of December 2011. For 2011, emerging markets (-18.2%) underperformed developed markets (-5%) by 13.2%. Developed markets' defensive performance was driven mainly by the US and Asia Pacific, which produced positive returns. The poor performance in emerging markets was driven by the BRIC countries excluding China which returned a respectable +2.5% for the month.

Our markets lost ground in December, with the FTSE/JSE All Share Index (ALSI) falling 2.5% in rand terms. In US dollars (USD), the ALSI fell 1.8% as the rand strengthened against the USD (the rand appreciated 0.6% during the month). Resources were the worst performing sector amid falling commodity prices - the sector returned -5.5%. The poor performance was driven by the gold, platinum and oil & gas (Sasol) sectors, which took a beating as the underlying commodities fell amid fears that the slowdown in Europe might affect global growth.

The industrial sector fell 1.7% in rand terms with the poor performance being driven mainly by personal goods, media and mobile telecoms shares, which fell 7.9%, 3% and 1.3% respectively. Despite the global market turmoil the financial sector delivered a respectable +1.9%, driven mainly by the life insurers, non-life insurers and banks, which returned 6.4%, 2.7% and 1% respectively. The excellent performance within the life insurance sector was driven by Old Mutual, up 16.6% for the month, following the news that it sold its Nordic business for GBP2.1 to Skandia Liv.

We believe that our investment philosophy and process will continue to deliver performance for our clients.