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August 2021


Markets remain resilient to the spreading Delta variant that is causing infection rates across the globe to soar. All major global equity markets closed the month of August in the green. U.S. major indices rallied over the month as stocks wrapped up one of their strongest August months ever, with the S&P 500 (+2.5%) recording its seventh-straight winning month. The Chinese stock market (Shanghai index +4,23%) managed to weather the ongoing regulation storm.

U.S. economic data released throughout August was mixed. A better-than-expected jobs report, released in the first week, followed by a worse than expected U.S. consumer confidence and retail sales mid-month data print created a sense of uncertainty in the market, as investors attempted to predict the growth narrative going forward. Near month-end, Fed Chair Jerome Powell, offered clarity on the U.S. narrative, stating that the U.S. economy had made enough progress to warrant the tapering of monthly bond purchases this year. He also stressed that there was no link between tapering bond purchases and increasing the interest rate. Inflation remains a talking point as the transitory debate continues, with the latest U.S. core inflation print coming in at 4.3% during August. All eyes will therefore be on the September print to see whether inflation starts to settle.

Covid-19 continues to affect the globe disproportionally, with strong EM vs DM themes developing.  Emerging markets manufacturing PMI (for August) contracted for the first time since June 2020, as the Delta variant, coupled with relatively low vaccination rates, continued to disrupt manufacturing sectors. Weaker demand growth in developed countries contributed to this theme, forcing emerging market manufacturing firms to reduce labour numbers for the first time in six months.

In South Africa, President Ramaphosa announced the reassigning of 6 cabinet members and the appointment of 4 new cabinet ministers, including the appointment of Enoch Godongwana as his new finance minister. Godongwana has assured international investors that he is committed to the policy trajectory set out by his predecessor Tito Mboweni, saying on Friday that he sees “no changes” in SA’s fiscal framework.

South Africa’s unemployment rate advanced to a record 34.4% (or 7.8 million) in the 2nd quarter of 2021. Trends show that unemployment is concentrated among the youth. Nearly two-thirds (64.4%) of those aged 15 to 24 are unemployed.

Going forward, some strategists have warned of a possible market correction in the coming weeks as growth “reaches its peak” while others are expecting a pause in the recent rally, as the market waits for new information. The upcoming FOMC meeting in September is on investors’ radars as the new Fed dot plot is set to be revealed along with key information surrounding the tapering of monthly asset purchases. Ultimately, the spread, or retreat, of the Delta variant and the profile of future economic data prints will shape the new market theme going forward.

As highlighted in previous months, we remain long-term focused and will continue to apply a measured approach to portfolio management.

Market moves of the month

JSE ALL-SHARE 67 428 -2,24% 13,50%
RESOURCE 10 66 370 -6,10% 15,28%
INDUSTRIAL 25 83 462 -5,21% 7,14%
FINANCIAL 15 14 511 12,44% 20,32%
SA LISTED PROPERTY 335 7,43% 22,70%


DOW JONES 35 387 1,29% 15,62%
S&P 500 4 523 2,90% 20,41%
NASDAQ 15 260 4,00% 18,40%
EURO STOXX 50 4 196 2,62% 18,12%
FTSE 100 7 110 1,11% 10,06%
NIKKEI 225 28 081 2,92% 2,32%
SHANGHAI 3 541 4,23% 1,96%


GBPUSD 1,38 -0,72% 0,94%
USDZAR 14,53 -0,27% -1,12%
GBPZAR 19,98 -1,62% -0,54%
EURZAR 17,16 -0,98% -4,40%

Source: Factset

Explore the chartbook for the month of August.

Global Investment Themes (July 2021)

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