VIDEO: Market Snapshot April 2023

Our Market Snapshot provides an overview of key events that influenced financial markets over the course of April 2023.

Global equities and bonds posted broadly positive returns in April as positive investor sentiment outweighed growth concerns and lingering worries over US regional bank stability. Markets were bolstered by growing expectations that the US Federal Reserve would likely pause its aggressive rate hiking cycle after a last 25bp increase in early May, as well as generally positive company earnings results. Global bonds eked out a 0.4% return amid banking sector credit concerns and the growing possibility (albeit slight) that the US government could technically default on its debt by failing to raise the debt ceiling.

The MSCI Emerging Markets Index recorded a -1.1% return compared to 1.8% from developed markets (MSCI World Index, both in US$), while South African equities rallied with a 3.4% monthly return (in rands) from both the FTSE/JSE All Share and Capped SWIX indices, led by a rebound in listed property. The JSE All Property Index returned 5.8%, while Resources stocks produced 4.0%, Financials 3.4% and Industrials 3.1%. SA nominal bonds lost 1.2%, while inflation-linked bonds managed a 0.4% return. Rand depreciation meant offshore investments were the place to be (see our Investment Focus for more details).

The M&G equity funds continued their positive run in April, returning between 2% and 3% on the back of this market performance. Meanwhile, our multi-asset funds delivered 1.4% (Inflation Plus Fund) and 2.1% (Balanced Fund), the latter enhanced by its larger equity weighting. The M&G Global Feeder Funds recorded slightly better returns in rand terms, ranging from 2.9% for the Global Equity Feeder Fund to 4.2% for the Global Property Feeder Fund. With SA equities and bonds continuing to trade at cheaper valuations than their offshore counterparts, we are still confident that local assets will outperform over the medium term, and we remain overweight these asset classes in our portfolios. Our view is that markets are pricing in overly-pessimistic scenarios for South Africa and investors are being well-compensated for the risks involved in holding local equities and bonds.