The month of March ended on a somewhat disheartening note, with South Africans waking up to the shocking news of yet another cabinet reshuffle which resulted in the unceremonious sacking of the finance minister and his deputy after market close on the 30th March. This abruptly ended the growing optimism South Africa has enjoyed of late as a result of positive emerging market sentiment, a strengthening currency and declining inflation. Understandably Friday 31st March was a negative trading session on the market which saw interest rate sensitive assets (bank shares, bonds and listed property in particular) come under pressure. Despite this local asset classes posted positive returns for the month of March.
On the global front, markets were broadly positive for the month as emerging markets outperformed their developed peers. Emerging markets continue to benefit from positive investor sentiment which has given momentum to a recovery in asset prices. In the developed world, European markets were the standout performers in March, as healthy economic data and a cooling of the political climate boosted investor optimism and risk appetite. Donald Trump’s failure to pass healthcare reforms through Congress has created doubts over his ability to enact other proposed reforms. This, together with the ongoing political uncertainty surrounding the Trump administration stalled US equity markets in March.