New Road Capital News

August was quite a risk-off month for markets both locally and globally, there was selling pressure across the board after the great returns seen during July. The All Share, developed market equities and emerging market equities were all down for the month. This does however make the All Share look particularly attractive on a valuation basis.

October saw a global equities sell-off akin to September, influenced by global unrest and continuing elevated interest rates. Despite short-term fluctuations, the market's medium- to long-term outlook remains steady, with attractive valuations. South African bonds stood out for their promising returns, despite a risk-off climate, with the ALBI demonstrating resilience amid equity market turbulence.

Interest rates have been rising for the past two years to combat high inflation rate. To understand where interest rates are likely to go from here, this article explores the building blocks of the inflation figure to determine what the main driver is.

Transitioning from the upbeat close of 2023, February 2024 unfolded with mixed market outcomes. Locally, the ALSI extended its downward trajectory amidst a lukewarm response to the South African budget speech, while global markets showcased resilience, particularly as emerging economies were buoyed by a recovery in China. Amidst looming uncertainties surrounding elections and policy, a gradual moderation in inflation, as well as attractive valuations suggest that there may be good prospects awaiting past the heightened volatility.

It’s often tempting to focus on one asset class and fall back on selection for returns and risk protection but this ignores the immense value of having a multi asset portfolio. This article illustrates this by showing how a simple blend can perform better than a pure equity fund.

May was a positive month for asset classes globally and locally, with local equities ending up despite local uncertainties and developed markets achieving an excellent 4.5% return in dollar terms on the back of more Tech rallies. US inflation slowed once more, breaking a two-month upward trend and local headline inflation maintained within the target band. The rand-dollar exchange rate was volatile but overall flat month-over-month. Bonds had a good month, with the ALBI and offshore bonds both up about 0.8% in their respective currencies. Initial reactions to the South African election outcomes were positive, with both bonds and equities rising, while the rand regained some strength on the Monday following the final results.

In this article, we examine overconfidence and hindsight bias in predictions, using the 2024 US presidential election as an example. We draw parallels to investing, warning against overconfidence in active stock picking while suggesting that portfolio diversification is a powerful tool for reducing risk.

August saw a quick recovery in equities following an early sell-off, with local and global markets posting strong gains. Inflation is cooling in both the U.S. and South Africa, and anticipated interest rate cuts are expected to further boost the economy. Bonds also performed well, with local and offshore markets delivering solid returns.

Offshore income is often overlooked as a building block in multi asset portfolios despite the wide variety in instruments. This article illustrates how US treasuries in particular are useful in multi asset portfolios, especially when combined with local equity.

US equities rally; local bonds excel amid low inflation and strong dollar.

Value investing, popularised by legends like Warren Buffett and Benjamin Graham, is based on a simple idea: buying undervalued stocks should lead to better returns. Historically, this approach has delivered strong performance, but in today’s highly efficient markets, does it still hold up?

SA equities strong as US markets turn down amid tariff concerns; inflation stable.