November 2024 Investment Review
November 2024 was a highly active month in financial markets, shaped by major political and economic developments. Central to the month’s events was the re-election of President Donald Trump, which had a notable impact on global sentiment. Against this backdrop, Developed Markets rallied, buoyed by policy clarity and optimism around US economic prospects, while Emerging Markets continued to struggle under pressure from geopolitical and structural challenges.
Global Overview
November was dominated by the US presidential election, where Donald Trump secured a second term. The election result was perceived as a continuation of business-friendly policies, including corporate tax reforms and deregulation initiatives. Markets welcomed the clarity, with US equities surging on optimism over growth prospects. The S&P 500 climbed 5.83% in USD, while the tech-heavy NASDAQ 100 advanced 5.29%, reflecting strong investor confidence in growth-oriented sectors such as technology and consumer discretionary.
Economic data in the US further supported this rally. October’s inflation reading, released in early November, showed CPI slowing to 3.2%, reinforcing expectations that the Federal Reserve would maintain interest rates at current levels. This shift in sentiment helped the MSCI World Index post a robust 4.59% return in USD, underscoring the strength of Developed Markets.
In contrast, Emerging Markets faced a challenging month. The MSCI Emerging Markets Index fell -3.59% in USD, dragged lower by China’s weak economic data and ongoing trade tensions with the US. President Trump’s re-election signalled a continuation of tough trade policies, including potential tariff escalations, further straining sentiment in the region. The Hang Seng Index declined -4.32% in USD, reflecting concerns about China’s lacklustre economic recovery and limited policy stimulus.
Local Overview
South African markets reflected the global theme of divergence, with bonds outperforming equities. The FTSE/JSE All Share Index fell -0.94% in ZAR (-3.05% in USD), weighed down by weakness in resource-heavy and financial sectors. Falling commodity prices and global risk aversion towards emerging markets compounded the challenges for local equities.
South African bonds, however, stood out as a bright spot. The FTSE/JSE All Bond Index gained 3.06% in ZAR (0.87% in USD), supported by attractive real yields and the South African Reserve Bank’s (SARB) decision to hold interest rates steady at 8.25%. The SARB’s dovish stance, alongside moderating inflation, bolstered demand for fixed income instruments.
The FTSE/JSE SA Listed Property Index posted modest gains of 1.65% in ZAR (-0.51% in USD), as stabilising interest rate expectations provided some relief to the sector. However, structural challenges such as weak economic growth and high vacancy rates continued to weigh on the long-term outlook for listed property.
The Rand faced significant pressure during November, trading at around R18.00 to the US Dollar. Currency weakness reflected global risk aversion and local fiscal concerns. Falling revenues from commodity exports, particularly gold and platinum, exacerbated these challenges, adding strain to the government’s fiscal position.
Conclusion
November 2024 showcased the diverging fortunes of Developed and Emerging Markets. The re-election of Donald Trump provided a stability boost to US markets, driving strong gains in growth-oriented sectors. Central Bank decisions to maintain interest rates also supported risk-on sentiment, with Developed Markets benefitting from improved inflation dynamics and policy clarity. The MSCI World Index and US indices delivered impressive returns, underscoring the resilience of developed economies.
Conversely, Emerging Markets faced persistent headwinds, particularly in China, where weak data and heightened geopolitical tensions dampened investor confidence. South African markets mirrored these broader themes, with local bonds delivering strong returns amid attractive yields, while equities struggled under the weight of falling commodity prices and Rand weakness.
The investment team remains positive on Developed Markets heading into December, particularly in the US, where stable policies and strong economic fundamentals provide a supportive environment for equities. However, the team remains cautious on Emerging Markets, favouring defensive positioning in fixed income and selective opportunities in Developed Markets. Locally, bonds are expected to remain a key focus area given their attractive risk-adjusted returns.
For investors, the committee emphasises diversification, selective sector exposure, and currency risk management as critical strategies in navigating the current global economic landscape.
Jacques de Kock
Quantitative Analyst & Portfolio Manager
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