"The South African markets enjoyed a relatively good month in comparison to developed markets, with bonds and the Rand also putting in a good showing," says BoE Private Clients economist Madalet Sessions.
"News that South African government bonds have been selected for inclusion in the Citigroup World Global Bond Index lit a fire under the bond market, with yields falling sharply across the curve and the Rand gaining over 2% on the day of the announcement. Equities, with the exception of mining stocks, continued their stellar performance year-to-date as positive earnings announcements helped to buoy sentiment," she says.
Sessions adds that expectations for interest rate hikes were also pushed further into the future. "As a result, the industrial sector continued to benefit from the current low interest environment, gaining 3.2% in April for the best performance among the major economic sectors. Financials rose 2.2% and resources recovered from sharp losses earlier in the month to close 2.8% higher. The market's positive outlook on interest rates boosted confidence and helped the JSE to beat many of its international counterparts," she says.
But although SA is faring comparatively well, the latest Provincial Barometer indicates that the country's overall economic growth was still too weak to make a real difference to job creation. Mike Schüssler, compiler of the Barometer, says while most sectors in the country were showing positive growth with agriculture apparently starting to recover, the mining sector's performance remained dismal.
"We are not in trouble, we just won't be able to work and produce income in the way we would wish. We are only growing at about two-thirds the rate we could achieve," he says. "But mining production is at the lowest levels for the past 51 years, and this does not look set to change. Gauteng, as the powerhouse of the country, can no longer rely on mining."
