The Johannesburg Stock Exchange All Share Index ended September 8.7% higher and thus 8.7% year to date higher. All major sectors were strong! The Rand was rampant against the US dollar in September gaining 5.5%. The South African All Bond Index posted a gain of 0.8% in September to post a total return year to date of 14.1%. Cash delivered a positive 0.5% in September and thus 4.8% year to date.

Global equity markets were generally very strong in September! The MSCI World Index (in Dollar terms) ended September 9.1% higher and thus 0.9% higher year to date. The MSCI Emerging Market Free Index (in Dollar terms) gained 10.9% and is up 8.7% year to date. The broad based CRB commodity index appreciated by 8.9% in September and is up by 1.2% year to date. Most emerging economies are growing strongly with the Asia doing particularly well. The US seems to be avoiding a double dip recession and the imminent onset of a round of quantitative easing by the Federal Reserve will support asset prices. The developed world may be embarking on some fiscal consolidation but monetary easing is alive and well. Part of the reason for embarking on quantitative easing is to boost asset prices and thus balance sheets and ultimately wealth and spending.

The South African economy is in recovery mode and the lowest interest rates in close to 50 years are helping spur a gradual uptick in household domestic expenditure. The real wage increases awarded to all union workers will also help spur expenditure. The rand is being supported by record inflows into SA government bonds with foreigners buying a record net R74bn in 2010. Foreigners have bought a net R19.6bn of equities and with three major buy outs in the offing we see equities being supported by foreign merger interest. We still see value in selected equities in SA with dividend yields of between 4% and 7%. We think that in general equities are offering value globally where there is evidence that the retail investor has lost faith with equities after 30 years of under performance relative to bonds and a multiple of equity market crashes, not least the 2008 meltdown. Notwithstanding the great performance by global equities in September and the possibility of some short term profit taking we believe that the value that exists in equities will result in further positive performance from current levels.

The Sasfin Balanced Fund will change it's name to Sasfin Managed Fund, effective from 1 November 2010. The sector changes from Domestic - Asset Allocation - Prudential Medium Equity to Domestic - Asset Allocation - Prudential Variable Equity. The fund loses its history.

The Johannesburg Stock Exchange All Share Index ended June with a total negative return of 3.2%. The major sectors ended June quite sharply lower with resources losing 4.1%, industrials losing 4.3% and financials 3.3%. The Rand was unchanged against a generally strong dollar. The South African All Bond Index posted a positive total return of 0.3% in June. Cash delivered a positive 0.6%! Global equity markets were generally strongly down in June. The MSCI World Index (in Dollar terms) ended June 3.6% lower. The Nikkei lost 4% (in local currency), the FTSE lost 5.1% (in local currency), and the DAX was unchanged (in local currency). The three major US markets were lower with the Dow down 3.6%, the Standard and Poor down 5.2% and the NASDAQ down 6.6%. The MSCI Emerging Market Free Index (in Dollar terms) lost 1.1% in June. The fund went into the month of June expecting a continuation of the equity pullback as sentiment suddenly turned bearish as the economic numbers out of the United States, still the world's biggest economy, started disappointing after a long period of beating estimates. Tactically we have adopted a more conservative capital protection mode and have held higher levels of cash. The SA equity market is generally holding up much better than most of the international markets as foreigners continue to buy SA shares to the tune of R21bn year to date. We are less convinced that equity markets will head higher in 2010 from current levels. Our concerns hinge on the sudden massive budget cuts from almost the whole of Euro-land, the UK and Japan, as well as a bigger than expected slow down in the US and China. The jury is out whether enough of the world will avoid a serious slow down so as to not materially affect earnings forecasts for late 2010 and into 2011. On the positive side interest rates will stay low and valuations are not stretched.

The Johannesburg Stock Exchange All Share Index ended March with a total positive return of 7.9%.The major sectors ended March higher with resources gaining 9.6%, industrials 7.2% and financials 6.7%. The Rand gained 5.2% against a generally strong dollar. The South African All Bond Index posted a positive return of 2.1% in March as the surprise cut in the repurchase rate by the SARB resulted in bond yields dropping. Cash delivered a positive 0.6%! Global equity markets were generally very strong in March. The MSCI World Index (in Dollar terms) ended March 5.9% higher. The Nikkei gained 9.5% (in local currency), the FTSE gained 6.1% (in local currency), and the DAX jumped 9.9% (in local currency). The three major US markets were higher with the Dow up 5.2%, the Standard and Poor up 5.9% and the NASDAQ gained 7.1%. The MSCI Emerging Market Free Index (in Dollar terms) gained 7.9% in March. The strong equity markets were mirrored in the commodity markets but the broad based CRB commodity index was flat in March. Oil prices followed on from gains in February with another 5.1% increase in March to about the $83 level despite plentiful supply. The copper price jumped 10.5% on economic optimism and supply fears to almost make new all time highs. The platinum price followed a strong February with a strong March gaining 6.6% as China became the world's largest car market. The gold price continued to benefit from perceived safe haven buying and consolidated at around $1115 per ounce.
The fund went into the month of March expecting a continuing consolidation of the global equity rally that started in mid March 2009 despite signs that the global recovery continue. From mid February we have been using equity weakness to pick up selected stocks. We would expect equity markets to head higher in 2010 but with much more moderate gains than those experienced in 2009.This is provided that there is no double dip recession globally.

Despite turmoil in the global financial markets, the JSE All Share Index climbed 27% for the year driven largely by the belief that the worst of the economic crisis had passed and global economies would return to growth, albeit at a slower pace. Resources outperformed financials and industrials rising 27% on the back of a sharp recovery in metal prices. The oil price rose 81% and platinum increased by 57%. On the mining board the top performer was Kumba Iron Ore increasing by 85%.

The industrial sector showed signs of improving late in the year with pick ups in manufacturing and mining, but sagging retail sales and high levels of unemployment remained a concern. Despite these factors consumer stocks recovered. Top performers on the industrial board over the year were Naspers (+83%) and Richemont (+46%). The financial markets lagged, dragged down by worries of growing bad debt levels, increasing insolvencies and difficult trading conditions. Banks performed reasonably well with Investec (+31%) and Nedbank (+31%) outperforming the Financial Index. Old Mutual gained 70% as investors grew comfortable that the company would not be sunk by its exposure to the US debt market.

A big worry has been the strength of the rand. Improving fundamentals including economic growth, corporate earnings and credit conditions increased investors' appetite for riskier assets, driving funds out of the dollar into higher yielding emerging market currencies. The strength of the rand reduced South African competitiveness, particularly in the exporting and manufacturing sectors.

2009 ended with strong indications that the global economy was emerging from the recession and with interest rates likely to remain low for longer, equities should continue to be an attractive investment vehicle in 2010.