This week marks the last scheduled investment meeting for 2021. It has truly been a year of uncertainty, putting our skills (and patience) to the test in various ways. This week we reflected on the past year and made sure that we are comfortable with our convictions as they stand before most of us go off on a much-needed year-end break. Jacques de Kock provides a summary of this week’s investment meeting below:



Our technical analysis shows that most global equity markets have turned bearish over the last few weeks, with every index (excluding China Shares and the Shanghai Index) breaking down past the 50 day moving average. It seems that the Chinese markets (both equity and bonds) have a life of their own and that they are completely oblivious to what’s happening in the rest of the world.

The graph below shows the exchange rate of the BRICS constituents versus the US Dollar. Confirming our point mentioned above, Andy Pfaff made the comment: “It seems like the Chinese markets have completely decoupled from the rest of the world…”

Source: Chinese Yuan in Yellow, TradingView, 04 December 2021


In bond markets, both the US 10 Year and Chinese Government bonds are showing some strength. Together with a strong showing by the US Dollar, it seems like a short-term flight to safety for many investors. It’s uncertain, however, how long this will continue with markets historically more optimistic as December rolls in. Most currencies came under pressure against a strong US Dollar with only the Chinese Yuan putting up a proper fight (as shown in the graph above).

In general, we are still skeptical about growth prospects for global risk assets, but the Chinese market seems to be providing us with a unique buying opportunity. With the US market looking extremely expensive and European and EM counters continually under pressure, this is one of very few opportunities.

Our other concern is how the global markets will react to news of the new COVID-19 villain in town. Thus far, evidence shows that the Omicron variant’s high transmission rate might not convert into higher fatality or hospitalisation rates. Accordingly, severe, growth-impeding lockdowns and travel restrictions were clearly a knee-jerk reaction and completely unwarranted. In South Africa, where Omicron has become the dominant variant of COVID-19, the daily transmission rate spiked this weekend to a level above the peak of the first wave, yet the fatality rate has been much lower than during previous “waves”.

South Africa

In our local markets, things seem to be more rose-tinted. It seems like the rest of the world is waking up to the fact that the travel restrictions on South Africa were unwarranted and that a big apology should be in order. A virulence study, set to be released soon, will hopefully confirm that the Omicron variant is less of a threat. This will likely determine the severity of President Cyril Ramaphosa’s lockdown and policy response and holds significant market-moving potential.

Our technical analysis shows a general bullish picture with only the Fini and Indi indexes coming under pressure in the short term. The bond market is also looking stronger after some poor form in the previous month or two with the ZAR following suit. This confirms our notion to stay the course after last week’s meeting and to not react hastily on knee-jerk reactions by our global counterparts.



We feel that our portfolios are well positioned going into the festive season. We will still be very cognisant of market conditions during the coming weeks and will intervene if any situation requires us to do so.

We wish everyone a wonderful festive season and hope that you stay safe and enjoy this time with your loved ones. Thank you for your support during the past year and here’s to a prosperous 2022 for all.


Risk Score

LOCAL: 4.5




Learn more about our Risk Score

At MitonOptimal we utilise our proprietary optimiser to calculate a SA and Global risk rating. This is a rating out of 10, with a rating of 5 reflecting our neutral risk position, 0 being a totally risk-off stance and 10 totally risk-on. We review and set the tactical risk rating on a weekly basis at our global investment meeting, and the outcome of this review may result in a tactical tilt to our portfolios. In extreme circumstances we might review our strategic risk score. For example: when we declare a risk score of 4, it means we are cautious relative to our long term strategic asset allocation plan – alternatively, when we declare a risk score of 6 we are more aggressively positioned relative to our long term strategic asset allocation plan.


Jacques de Kock

Quantitative Analyst & Portfolio Manager



The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness. MitonOptimal South Africa (Pty) Limited is an Authorised Financial Services Provider Licence No. 28160, regulated by the Financial Sector Conduct Authority (FSCA) – Registration No. 2005/032750/07.MitonOptimal Portfolio Management (Pty) Limited is an Authorised Financial Services Provider Licence No. 734, regulated by the FSCA – Registration No. 2000/000717/07.

Share This