Market Overview (Namibia) – April 2024

April was a largely disappointing month for global investment returns as forecasts for interest rate cuts in the US were pushed back further into 2024, weighing on both equity and bond returns. Some profit-taking also emerged in developed equity markets after the good gains of previous months, particularly in Japan, while Chinese equities experienced a rebound following sharp losses earlier in the year. Emerging equity markets posted mixed returns, broadly managing to outperform their developed counterparts, with South Africa’s All Share Index delivering 3.0%. This was driven largely by a 7.1% return from the Resources sector primarily on the back of the resources giant BHP’s bid for rival Anglo American, and smaller gains from Financials. SA bonds were also in positive territory with a 1.4% return, and the rand and Namibian dollar managed to appreciate between 0.6% - 1.2% against the major global currencies. Again, the diverse market moves highlighted the benefits of a strongly and carefully diversified investment portfolio.

Namibian markets delivered positive results in April: the NSX Overall Index returned 12.1% (boosted by a 32% gain in Anglo American, which has a 17% weighting on the NSX), and the NSX Local Index returned 1.6% on a total return basis. The IJG All Bond Index returned 4.1% while the IJG Money Market Index increased by 0.7%.

Our client portfolios with global exposure benefited from our overweight positioning in Chinese equities, including our overweight exposure to Naspers and Prosus, while we had reduced our exposure to Japanese equities by taking profits ahead of the month’s weakness. Our house-view portfolios also saw value added from our continuing overweight in SA and Namibian-listed banks and the rally in Anglo American shares. Meanwhile, our asset allocation positioning changed little in April, although we did trim our small exposure to African equities (ex-South Africa and Namibia) somewhat on the back of deteriorating liquidity conditions in Nigeria and Egypt. It remains a stock-picker’s market given the dispersion in performance and valuations across geographies, sectors and even within sectors.  

In fixed income, there was little change in our positioning as SA bond yields stayed elevated compared to other SA assets and their own history -- investors continued to demand high premiums ahead of the 29 May national election and generally higher risk perceptions. We remain slightly overweight and confident that patient investors will be well rewarded for their SA bond holdings over time: the 10-year government bond’s real yield of about 7% currently is more than double our expected long-term average real return of about 3% from this asset class.

Collaborating for success

M&G Investments Namibia is proud to have been involved in organising an evening of learning, inspiration, and networking with industry leaders. This inspiring event featured the distinguished financial and business leader, Jeff van Rooyen, who shared insights from his remarkable career journey, including learnings from his time as CEO of the Financial Services Board (now Financial Sector Conduct Authority) in South Africa. We wish to extend a vote of thanks to the Bank of Namibia for providing space for this engagement and to the esteemed public speaker and media personality, Hilda Basson-Namundjebo, for the captivating interview with Jeff.