The FTSE/JSE All Share lost -13.2% in September. This was driven by Resources which returned -21.9%, whilst Financials and Industrials returned -2.4% and -3.9% respectively. The Property unit trust lost - 3.61%, the All Bonds Index gained 2.5% and Cash 1%.

Despite recent downward trends in international food and oil prices, and the August decrease in the petrol price, headline CPI and CPIX inflation in August were higher than expected rising to 13.7% y/y from 13.4% y/y and to 13.6% y/y from 13.0% y/y respectively.

With annual growth in credit demand showing signs of slowing in August, as evidenced by recent declines in growth in broad money supply (M3), Private sector credit and further petrol price cuts expected, CPIX inflation is forecast to have peaked at 13.6% y/y and should ease off towards the end of the year. Notable upside inflation risks such as the current Rand volatility, up ward pressure on domestic wages and uncertainty regarding rental increases remain.

The SIM Inflation Plus holding was sold and proceeds invested in the Stanlib Aggressive Income Fund.

The FTSE/JSE All Share Index declined with 4.4% in June. This lost was driven by Financials -10.0% and Industrials -9.6%, while Resources managed to end the month gaining 1.3%. The Property Unit Trust Index declined with -10.0%, the All Bond Index with -1.7% while Cash returned 1.0%.

Inflation pressures worsened over the past year due to global food and fuel prices and a weaker rand. In June, headline CPI inflation rose to 11.7% y/y, while CPIX inflation increased to 10.9% y/y. CPIX inflation is expected to remain at around current levels for much of this year. The South African Reserve Bank has increased the Repo rate by 50bps to 12.0% at their June meeting. The SARB has increased interest rates by 300 basis points over the past year, taking the total increase to 500 basis points since June 2006. The higher inflation figures add to expectations that the SARB is likely to raise interest rates again at the August MPC meeting.

There were no changes in the underlying holdings during the quarter.

The FTSE/JSE All Share Index declined 4.4% in December led by Resources -6.2% and Financials -5.0% with only Industrials delivering a positive return of 0.5%. The All Bond Index declined 0.8%, while Cash returned 0.9% and Property Unit Trusts 0.6%.

The SARB announced its eight-rate increase of 0.5% since mid-2006 in December, causing prime to rise to 14.5%. The risks remain on the upside with CPIX increasing to 7.9% and CPI by an annual rate of 8.4% last month. The worse than expected CPI data was partly offset by the better PPI figure of 9.1%.

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