Sustained commodity prices could spur SA and other emerging economies
If commodity prices continue higher and inflation keeps falling, a lacklustre South African economy should accelerate slowly this year, writes Tony Cadle
Most global equity markets reported single-digit returns last year, but the shining light was the US equity market where the S&P500 posted a return of 12%. In contrast, the FTSE 100 declined 0.2% in dollar terms while the German Dax 30 gained 3.3% and French Cac 40 5.7%. Emerging markets did report double-digit dollar returns of 11.6% based on a rebound in commodity prices and strengthening currencies. In local currency terms, the JSE’s all-share index produced a below-inflation return of 2.63% and the rand-hedge biased top 40 -1.52%, the negative return resulting from rand strengthening. So what is the investment outlook for 2017? Political uncertainty in the developed world may well continue through the year. The initial view of a Trump presidency in the US appears positive for equity markets with his pro-business stance towards taxes, infrastructure spend and lack of concern about climate change.
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