It was a great occasion, seeing everyone in the first investment meeting of the year… and on a Wednesday as well. With some lighthearted banter about various sports and political events kicking off the meeting, we settled in and discussed what we thought about the year past and what we expect for 2022. Jacques de Kock provides a summary of this week’s investment meeting below:



Gerry Grispos took us through our shorter-term technical analysis focusing on global counters first. We are seeing some USD weakness over the short-term with the SIROC in support of this finding. This ties in with what we are seeing in the market news out of the US putting pressure on the currency. We are, however, not sure about the longevity of this weakness, given that the FED is growing increasingly hawkish and increased rate hikes should benefit the USD over the medium term. In contrast, we are also seeing some GBP strength versus most other currencies.

The technicals are too showing the start of a bearish trend on US equities with the rest of the world’s equity markets quite a mixed bag. There is some support for Chinese Government Bonds and the hawkish nature of the FED is pricing into the US Bond market with 10-Year bonds and TIPS coming under pressure.

BlackRock analysis is showing a very interesting picture of the past year. As can be seen from the graph below, 2021 was one of only four previous years since 1977 that equities gave a positive return whilst global bonds returned negative. Their base case for 2022 is a “new nominal” where real rates remain low as they expect a muted central bank response to higher inflation. This should bode well for stocks, but with the yield curve steepening, should still be negative for bonds.

Source: BlackRock Investment Institute, December 2021

Another hot topic was the US equity market and its continued growth throughout 2021. This is causing the S&P 500 to look expensive, any way we look at it. There is also the problem of concentration within the top 10 counters and their relative contributions to growth and earnings within the index.

We are seeing a rotation out of Growth into Value counters, although for how long this will continue, we are uncertain. From an asset allocation perspective, we think it’s prudent to go with the trend at this stage.


South Africa

From a technical point of view, it’s mostly bears roaming throughout our analysis. The R186 and R2030 are trading flat though, but probably not for long. With inflation numbers for December touching the upper limit of the SARB’s target range, it should make the decision to hike rates a near certainty. The only question that remains is by how much…

It seems like the market is pricing in a significant SARB rate-hike risk for the year ahead (around 200bps) on the back of record high oil prices and Eskom also looking to increase electricity prices (calling for an increase to the tune of 20.5%). We don’t think that SARB will hike with such vigour and forecast a hike of closer to 100bps this year and another 100bps in 2023. With this in mind, as well as a muted FED response, it bodes well for the ZAR in the next couple of months.

Talking about the Rand, we are seeing short term ZAR strength versus most other currencies. But in general, the moves throughout the last couple of months have been difficult to explain and to try and forecast into the future (from a technical perspective) is still quite baffling. This is causing us to keep away from making portfolio decisions based on where the Rand is going, which has historically also been a very good general rule to follow anyway.



We are looking forward to a new year and (hopefully) some more easing of lockdown restrictions. It was very difficult watching the Proteas (and in particular newcomer Keegan Peterson) performing so well against a strong Indian team without being able to be in the stands ourselves. It’s just not the same… Luckily, it seems like we might see our national state of disaster coming to an end, taking another step closer to a “world after Covid”.

Although the year should have some interesting events with the ANC’s elective conference in December, we are positive about what’s in store and look forward to the year ahead. We wish everyone a prosperous new year and hope to see you more regularly and in person over the year to come.


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.

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