STANLIB Podcasts

Globally, central banks cut rates and this helped local bonds. The STANLIB Flexible Income Fund was already holding a sizeable overweight in SA bonds and SA property, which paid off handsomely for clients in the quarter. The team was not surprised by the SARB’s modest 25 bps rate cut, but expects a series of cuts to mid-2025, especially as SA’s inflation rate is expected to fall below 4% for the r...

If China doesn’t have any growth ‘that really will impact our exporters, especially our commodity exporters, in terms of their being able to sell stuff into China’ – Ndivhuho Netshitenzhe from Stanlib.

US retail sales and industrial production data for September tell different stories. Retail sales were surprisingly good, probably because the US economy continues to add jobs. However, US industrial production declined, indicating that the manufacturing sector lacks the same buoyancy as the retail sector. The answer seems to be that US consumers are buying imported items, which feeds the Trump ca...

The investment landscape is inherently uncertain and markets can take an unexpected turn at any point. Managers of multi-asset income funds have the benefit of being able to actively shift between different fixed income asset classes and property to deliver bond-like returns with a smoother return profile and lower risk, through different market cycles. Sylvester Kobo, Deputy Head of Fixed Income...

US inflation date for September contained two surprises: CPI went up 0.2% m/m, against market expectations for 0.1% m/m, and core inflation rose by 0.3% m/m vs expectations for 0.2% m/m. Positively, shelter inflation is slowing meaningfully. The latest print is unlikely to derail the downward interest rate trajectory, and the US Federal Reserve is expected to cut by 25 bps at its November meeting....

Several US labour market reports released last week were surprisingly strong. The US created 254 000 jobs in September, well above expectations for 150 000 jobs, while unemployment fell to 4.1% from 4.2%. This encouraged the equity market, as it suggested the US is not about to move into recession, but it dampened hopes for a 50 bps interest rate cut. The next cut is likely to be only 25 bps. In S...

China’s authorities last week unveiled a series of measures designed to stabilize the property sector and stimulate consumer spending. These measures included a cut in banks’ reserve requirements and in interest rates. Financial markets were encouraged, having expected any policy stimulus would only follow the US presidential election. Sentiment in SA has improved since the May election and this i...

The US Federal Reserve will meet on Wednesday this week to discuss interest rates and the South African Reserve Bank (SARB) will meet on Thursday. Both central banks are expected to cut rates by 25 bps and signal further cuts in the rest of this year and 2025. The SARB is most likely to cut by only 25 bps, given its cautious approach to keeping inflation around 4.5% and withdrawals from pensions u...

The US August labour market report was mixed. It showed an improvement in the unemployment rate to 4.2% from 4.3% in July, but the number of jobs created was below the monthly average. Whether the US Fed will cut interest rates by 25 bps or 50 bps later this month to stimulate the economy is under debate. STANLIB believes a 25 bps cut is most likely, followed by a series of others. In Q2 2024, SA’...

US core PCE inflation for July, at 2.6% y/y, was welcomed because it shows inflation is under control, although it still above the US Federal Reserve’s target of 2%. In Europe, consumer inflation has moderated to 2.2% y/y, close to the European Central Bank’s target of 2%, which may prompt the bank to cut rates again before the end of the year. SA’s producer inflation rate of 4.2% y/y for July ref...

SA’s headline Consumer Price Inflation (CPI) rate for July was surprisingly subdued, slowing to 4.6% from 5.1% in June. This reflects a slightly lower than expected electricity tariff hike and a slowdown in food price increases, as well as fuel price cuts. The slowing inflation trend makes it more likely that the SA Reserve Bank will start to cut interest rates in September. In the US, signals fro...

The release of generally encouraging CPI and PPI data in the US, together with a strong retail sales report, helped global equity and bond markets to recover last week. There are high expectations that the US Federal Reserve will start to reduce interest rates in September, probably starting with a 25 bps cut. In SA, strong June retail sales delivered a positive surprise to markets, but may not be...

US data released this past week points to less concern about inflation and more concern about the labour market. The Federal Reserve has kept interest rates unchanged at 5.25% to 5.50%, and the forward guidance is a more confident outlook for inflation, with the Fed comfortable of reaching its inflation target within the next year or so. The Fed is now focusing more on its dual mandate of keeping...

US GDP growth in Q2 2024 was 2.8% q/q, well above expectations for 1.9%. About half of this came from growth in inventories and government spending pre-election, which is not necessarily sustainable. Since there is evidence that consumer demand is softening, the underlying dynamic is that US growth is easing but the economy is not moving into recession. Although SA’s CPI rate for June was above th...

The resilience of the US equity market, and especially the tech sector, continued to surprise investors in Q2 2024, says Marius Oberholzer, STANLIB’s Head of Multi-Asset. For the rest of 2024, he anticipates risks around global geopolitics, with elections seeing a swing to the right, fiscal deficits, and whether inflation data continues to soften. China remains a concern for all investors. Althoug...

The STANLIB Enhanced Multi-Style Equity Fund slightly underperformed its benchmark in Q2 2024 due to its underweight in Anglo American, which was buoyed by the BHP bid, says Rademeyer Vermaak, Head of Systematic Solutions. However, over any rolling three-year period, the fund has consistently beaten its benchmark, reflecting its focus on the intersection of quality, value and growth to build robus...

The STANLIB Flexible Income Fund delivered a pleasing 3.2% return in Q2 2024 vs 2.3% for the benchmark, despite an eventful quarter, says Sylvester Kobo, Deputy Head of Fixed Income at STANLIB. The fund made dynamic asset allocation and duration decisions, especially before and after the South African election. The R57.5 billion STANLIB Income Fund, which has delivered an above-inflation return of...

Although the Magnificent 7 stocks in the US are expected to continue delivering margin growth, opportunities are now opening up in more defensive sectors of the US market, such as consumer staples, says Amit Parmar, Investment Specialist – International Equity Group, J.P. Morgan Asset Management. Parmar said Q2 was positive for the STANLIB Global Select Fund, sub-managed by JPMAM, as it delivered...

At its latest Monetary Policy Committee meeting, the South African Reserve Bank kept the repo rate unchanged at 8.25% but two members argued for a cut of 25 bps, which is an indication of future direction. The committee revised its forecast of end-of-year inflation to 4.3% from 5.2% at present. We expect the bank will cut the repo rate by 25 bps at its September meeting and by another 25 bps in No...

US inflation data for June delivered positive news for potential interest rate cuts. It showed a 0.1% m/m decline, while the market expected a 0.1% m/m increase. Much of the decline was related to energy prices, which fell 2% m/m, while the increase in shelter inflation, at +0.2%, was more muted than in previous months. As a result, on an annual basis, US headline inflation is down to 3% and core...

A consistent message is coming through latest US labour market data releases: labour market conditions are softening as high interest rates are having an impact. Although the US added 206,000 jobs in June, more than expected, many are being generated in non-cyclical sectors like government, education and health care. The unemployment rate is now 4.1% and seems to be edging higher. We believe the U...

In SA’s new Government of National Unity (GNU) Cabinet, the number of ministers and deputy ministers has grown, which is costly, and there are a lot of new faces in Cabinet whose competence cannot be judged yet. However, there are positive aspects: there is continuity in the key economic cluster, implying that fiscal policy is likely to stay the same, and reform of SOEs is expected to continue und...

SA’s latest inflation data for May was encouraging, with a 0.2% m/m increase, keeping annual inflation at 5.2%. This is still above the SA Reserve Bank’s target of 4.5%, but June’s petrol price decrease is expected to be followed by another in July, which will further bring down inflation, possibly towards 4% by year-end. As a result, some forecasters believe there could be three interest rate cut...

SA’s latest inflation data for May was encouraging, with a 0.2% m/m increase, keeping annual inflation at 5.2%. This is still above the SA Reserve Bank’s target of 4.5%, but June’s petrol price decrease is expected to be followed by another in July, which will further bring down inflation, possibly towards 4% by year-end. As a result, some forecasters believe there could be three interest rate cut...

In the podcast, Kevin Lings discusses SARB’s decision to keep interest rates unchanged at 8.25%, with the MPC indicating that the risks to SA inflation are now “balanced”. Fittingly, he also focuses on the recent SA elections. The rand lost a significant 4% of its value against the US dollar during in the past nine trading days, as investors became more concerned about the likely outcome of SA’s e...