COP26 Implications for South Africa
COP26 (the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change) took place in Glasgow, United Kingdom, in November 2021.
Latest Developments From The Task Force On Climate-Related Financial
The Task Force on Climate-related Financial Disclosures or TCFD, was established by the Financial Stability Board to “improve and increase reporting of climate-related financial information.” The first report was published in 2017 and comprised a set of recommendations on how to disclose climate-related financial considerations. Since then, the focus has been on assisting with the implementation of the recommendations. Sector specific guidance has been developed as well as status reports that track uptake. In mid-October 2021, the latest Status Report was published which assesses uptake, together with two additional documents both of which are updates of the “Implementing the Recommendations of the TCFD report” and “Guidance to assist companies with disclosure of climate-related metrics, targets and transition plans.” We have summarised the latest updates for the South African investor with a focus on the implications for South Africa as a developing nation.
Tough times loom as the interest rate cycle turns swiftly
With inflationary pressures building up both globally and locally, the SARB monetary policy committee was forced to deliver its first interest rate hike in about three years in its most recent meeting. The hike was anticipated by the market as the forward rate agreements had already steepened ahead of the announcement. What is interesting and perhaps a sign of tough times to come for consumers is that the SARB’s Quarterly Projection Model (QPM) prices a slightly aggressive policy rate lift off-path over the next three years. According to the model shown on the graph below, consumers could see the servicing costs on their bonds and other loans going up by as much as 150 basis points next year.
Monthly financial markets outlook | November 2021
Global risk assets bounced back strongly in October with the MSCI ACWI gaining 5.1% led by US large caps (+7%) and developed markets growth stocks (+6.7%) in dollars. Tech stocks that had come under pressure on news of policy normalisation performed exceptionally well buoyed by strong third-quarter earnings. More than 83% of tech companies that had reported their earnings at the end of October outperformed expectations.
Investors strongly disagree with Powell’s optimistic interest rate guidance
Several equity indexes, globally, closed out September with their worst monthly losses since the early days of the pandemic. The S&P 500 was 4.8% down, its first monthly drop since January and the biggest since March 2020. Locally, the All-Share Index plunged 3.14% led by resources which dived 9.55%.
All The Pieces Matter
The sentiment that many private markets investors have shared for a long time is one that there is a need...Monthly financial markets outlook | October 2021
All major global asset classes ended in the green in July, but the headline numbers do not tell the full story about the market dynamics that led to that outcome. The performance of global equities was very narrow reminiscent of 2020. The S&P 500 which houses the US’s largest companies touched a new all-time high in July supported by above-average earnings deliveries by most of its constituents. European equities were up 1.8% on the back of the reopening momentum as most governments in the bloc ease lockdown restrictions. The fixed income segment was driven by inflation linkers and investment-grade bonds. Global inflation-linked bonds jumped 4%, followed by global investment-grade bonds and US high yields which delivered 1.3% and 0.4% for the month.
Quarterly style analysis | September 2021
The 27four quantitative research team conducts style based analysis on the top 100 shares (by market capitalization) listed on the...
Is this the beginning of the end of the bull run?
Several equity indexes, globally, closed out September with their worst monthly losses since the early days of the pandemic. The S&P 500 was 4.8% down, its first monthly drop since January and the biggest since March 2020. Locally, the All-Share Index plunged 3.14% led by resources which dived 9.55%.