The month of September was a brutal one for stock markets and commodity prices, one of the worst in living memory. The MSCI Emerging Markets Index (of which the JSE comprises 6.5%) tumbled 17.5% in September and 26.9% in the quarter ending September, in dollar terms. This was much worse than the developed market index, the MSCI World Index, which fell 15.2% in the quarter to end September. This ended a period whereby emerging markets outperformed developed markets by an average of 13% per year for nine long years.

By comparison, the JSE All Share Index fell 13.2% in September and 20.6% in the quarter in rand terms (24.5% in dollar terms), ie not quite as badly as the Emerging Markets Index. The SWIX All Share Index fell 13.9% in the quarter, much better than the All Share Index because of a lower resource component. The main problem for the JSE was the 40.4% fall in the Mining Index in the quarter (All Share Resources Index fell 38.3%), because Financials actually rose 11.9% and Industrials rose 2.9%. Mining shares tumbled from record highs as palladium fell 57.4% in dollars during the quarter, platinum fell 51%, copper fell 27%, nickel fell 27%, steel prices fell 27% and brent crude oil fell 30%.

Fortunately the other three asset classes did well, with SA Listed Property jumping 23.1% during the quarter, the All Bond Index returning 12.6% and cash returning 3.1%.

Outstanding equity performances during the quarter included General Retailers (up 26.8%) and Banks (up 25.5%).

Finally, while the rand lost 5% during the quarter against the resurgent dollar, it gained 5.8% against the pound and 5.6% against the euro.

In one of the worst quarters for a long time for global equities because of probable US recession and the nasty credit crisis, the MSCI World Index of mostly developed markets fell 8.9% in dollars, while the MSCI Emerging Markets Index fell 10.9%. Meanwhile global bonds fared very well, rising almost 11% in dollars as bond yields tumbled amidst fears of recession and sharply declining US official interest rates.

South Africa's All Share Index looked good on paper (up 2.9%), because of soaring commodity prices and mining shares (up 17.8%), but the tumbling rand (down 22% against the euro) meant that our Financials declined by 32% in euros during the quarter and our Industrials by 27%. Even our All Bond Index was down 23.5% in euros. So in global terms our market got hammered. In fact the brightest star of the past few years, the listed property sector, fared worst, falling 10.9% in rands, or over 32% in euros.

In rands the Top 40 index fared best because of resources, rising 5%, while Mid Caps did worst (-10.8%) and Small Caps fell 10.2%. While the All Bond Index lost 1.9% during the quarter, inflation-linked bonds gained 5.4% as inflation soared.

By the end of March, many of the financial and industrial shares were down over 30% from their 2007 record highs, including First Rand (-38%), Foschini (-50%), Tiger Brands (-33%), Investec (-49%), Absa (-32%) and Imperial (-55%). It is notable that in the first couple of days of the 2nd quarter many of these shares have so far shown the best appreciation, partly because they're offering the best value for long-term investors prepared to see through the bad times. The oversold rand has possibly begun to retrace some of its losses as global investors snap up riskier assets like SA shares. Meanwhile offshore shares, trading at 15-20% below their peaks of eight years ago and offering superb value, have bounced sharply too in the early days of April.

The STANLIB Index Fund is a passively managed index-tracking fund. The aim is to replicate the performance of the FTSE / JSE All Share Index by purchasing the index constituents in the correct proportions.

The Fund is aimed at investors who seek exposure to large cap stocks at a reduced cost. The Fund returned 19.91% for the 12 months to December 2007, compared to the benchmark FTSE / JSE All Share Index return of 19.19%. Tracking Error for the Index fund is currently 0.86%.