The FTSE/JSE All Share Index gained 5.0% during September led by Resources with 12.7% and Industrials with 1.6%, while Financials lost 2.4%. The Property Unit Trust Index gained 6.0% during the month and is close to the previous record high in May. Bonds performed better than expected, as inflation seemed to show signs of having peaked, gaining 2.3% in September while Money Market returned 0.8%.

In August 2007, headline CPI inflation rose by 0.5%, with the annual rate easing to 6.7%y from 7.0% in July. CPIX was above the target range of 3% - 6% for the fifth consecutive month. The annual change in the PPI was lower at 9.4%.

There were no changes in the underlying holding during the month.

The FTSE/JSE All Share declined by 0.95% during June. The best performing sector was Resources, which gained 0.8%, while the Financials and Industrials index lost 2.3%.

South African Bonds (ALBI) shed 2.1% for the month and the Property Unit Trust sector 2.3% after the consumer inflation quickened from 6.3% in April to 6.4% in May, breaching its target range for the second month in a row and exceeding consensus forecasts. The Reserve Bank opted to hike the Repo Rate in June to 9.5% after two consecutive meetings at which interest rates were unchanged. There is still a risk that the Reserve Bank may hike rates by a further 50 bps in August given the upside risk to inflation towards the end of this year.

We sold the holding in the Investec Value Fund and reduced the holding in the Coronation Absolute fund with 5% during June. The proceeds were invested in the 36One Flexible Opportunity Fund.