EMERGING MARKETS
BRIAN KANTOR: Made in China — SA’s economic future
Exchange rate and inflation trends in SA are bound to follow the direction taken in all emerging-market economies, especially China
Emerging financial markets and their currencies enjoyed a strong comeback in 2017, after years of underperformance when compared to the S&P 500. The JSE all share index kept pace with the S&P 500 in 2017 in US dollars. An emerging-markets benchmark tracking stock would have returned more than 40% in the 12 months to January 2018, while the S&P delivered an impressive 26%, though less than the 28% delivered to the dollar investor in a JSE tracker. Investor enthusiasm for equity markets in general and for emerging-market securities and currencies in particular, however, ended abruptly in January 2018 and waned further in April. The emerging market equity draw-downs since January have been depressingly large. The emerging markets index and the JSE have now lost about the same 16.5% of their January 31 US dollar values, while the S&P 500 was down a mere 4% at the end of June.The carnage was spread very widely across the emerging markets universe. The South African component of the overa...
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