The SA Equity Market along with equity markets around the globe had a strong performance during the third quarter of 2009, and continued to support what appears to be a recovery trend established in the beginning of the second quarter. The FTSE/JSE All Share Index was up 13.91% during the quarter, a return 5% higher than the 8.65% recorded during the second quarter of this year. The main driver of performance was the Industrials sector, which returned 21.73% during the quarter. The Financials sector had a return of 15.15%, while the Resources lagged, with a return of 11.12% during the quarter. Short-term money market rates continued to decline following the 50bps cut in the Repo rate over the quarter. The STEFI Composite is currently yielding about 0.62% per month. SA Bond s benefited from the declining interest rates, with the All Bond Index returning 2.9% for the quarter. However, not all areas of the yield curve benefited. The ALBI 1-3 area of the curve underperformed cash, as yield in this area moved up, after being artificially depressed by excess demand for these bonds from banks. Inflation Linked Bonds as measured by the Barclays Inflation Linked Index, underperformed cash, as the outlook for inflation improved with the strong rand. Property had a very strong quarter, producing equity-like returns in an environment that was positive from both an interest rates and increasing of investor risk appetite perspective.

After a difficult start to the year, the second quarter of 2009 proved more favourable for equities. The FTSE/JSE All Share Index was up 8.65% for the quarter, with the best performance coming from the Financials and Industrials sectors, up 12.25% and 14.14% respectively. The Resource sector only returned 2.77% for the quarter. The Top 40 returned 7.74% for quarter, while Mid caps gained 14.48% and Small caps returned 11.62%. In a declining interest rate environment, which should have been positive for bonds, bonds underperformed cash over the quarter, as the yields on long bonds increased and there was a further normalization of the South African yield curve. Property, although the best performing asset class on a 12-month basis, had a difficult quarter returning -0.88%, as expectations of a slowing SA economy and rising vacancies impacted this asset classes' performance. The rand continued to strengthen against both the US Dollar and the Euro, to once again become the best performing currency on a yearto- date basis. The rand strengthened by 23.15% against the US Dollar and 16.57% against Euro over the quarter.

The month of March experienced a strong recovery in the local Equity markets which resulted in the FTSE/JSE All Share Index posting a return of 11.0%. This was mainly driven by Resources and Financials counters, with platinum posting an outstanding return of 30.7% for the month and 9.55% for the quarter. Resources returned 14.53% while Financials gained 12.1% and Industrials lagged returning only 4.4% for the month.

The Property Market fared well and followed the up-tick in equities returning 2.6% for the month.

The Bond Market however struggled in March, with the All Bond Index only returning 0.1%. Overall the first quarter of 2009, saw South African Bonds struggling as a result of the Yield Curve normalising, marked by an increase in the yield on long dated bonds.

The Rand strengthened against the US dollar by 4.9% and gained 0.1% against the Euro, as the US dollar weakened across the board.

December marked the end of a tough year on a positive note. The All Share Index was up 1.52%, driven by Industrials which returned 5%, while Resources and Financials lost 0.2% and 1.2% respectively. Over the year the All Share Index lost 23.2%, driven by all three sectors. Resources lost 28.3%, Industrials 26.2% and Financials 26.2%. The Bond market continued to rally with the All Bond Index up 7% during the month and 17% for the year. Cash returned 1% during the month and 12.4% for the year whilst listed Property was up 4.9% during the month and lost 4.5% over the year. The Monetary Policy Committee noted improvements in the Inflation outlook in South Africa and decided to reduce the Repo by 50 basis points to 11.5%.