During a recent presentation by PSG Asset Management we were once again reminded of the forward-looking nature of financial markets. What we mean by that, is the suggestion that the current value of a share, a bond, or even a currency, already reflects the impact of potential future events. This will mean that:
Two things we discussed in previous newsletters are still happening in our market, namely:
- the political climate and even the state of the economy are not necessarily reflected in the performance of the stock market; and
- using the South African Top 40 Index as a measure of the broader performance of the South African stock market can be very misleading.
You may find it hard to believe, but the South African Top 40 Index is up 20% year to date and the broader All Share Index is up 16%. You may be forgiven for thinking that this does not reflect what you read in the papers every day regarding the situation in South Africa, with political turmoil; farm murders; state capture; rampant corruption; a not so impressive mid-term budget; and a 27% unemployment rate. Read More