A review of the economy in 2018
a Review of the economy in 2018
What follows is a review of the economic events and data for 2018, a
year that will go down in history as one investors would rather forget.
In this, the first newsletter of 2019, I wish you a prosperous and fruitful year on the economic front.
What follows is a review of the economic events and data for 2018, a year that will go down in history as one investors would rather forget. Markets on a global scale reported negative returns for the 2018 calendar year, with most asset classes struggling.
A review of local markets and economic events indicates that 2018 started on a positive note, with the election of a new ANC president and the recall of Jacob Zuma as president of South Africa early in February. This created a sense of hope among investors, and equity and bond markets performed well in the first half of the year. Regrettably, the Resilient property scandal that broke in January wreaked havoc on the property sector in the first few months and the sector did not recover for the rest of the year.
Two major events that plunged SA markets into turmoil in the year under review were i) the announcement by Statistics SA on 4 September that the economy was in a technical recession, and ii) a dangerous mix of economic and political forces that triggered a crisis in Turkey, which sparked an emerging-market sell-off and had a ripple effect across most markets.
Market performance for 2018 was dismal to say the least, with the JSE all-share index losing 8.53% in value. The industrial sector was the biggest loser, suffering a total loss of 17.87%. The resources sector returned a solid 17.77%, while the financial sector recorded a loss of 25.59%. The rand closed the year at R13.85 to the USD, which is 15.97% weaker than the previous year.
The picture was equally bleak across the globe. Brexit fears in Europe and the continued trade war between the US and China decimated markets. In the US, the S&P 500 closed 6.24% in the red for the year, while in China markets lost 24.59%, putting them in bear territory. In Europe, the German DAX lost 18.11%, while the CAC in Paris closed 10.95% down. Markets in the UK closed 12.48% lower, with no end in sight to negotiations surrounding Brexit. The Japanese Nikkei 225 index lost 12.08% in value.
Although 2018 offered no safe haven for investors, most markets currently reflect improved value. With the geopolitical outlook improving on a global scale, markets responded in kind for the first few days of 2019. Let us hope the momentum persist for the remainder of the year.
SECURITAS – Wealth Management
Be always at War with your vices, at peace with your neighbors, and let each New Year find you a better person.