Quarterly style analysis | June 2022

2022 has seen a plethora of negative news flow starting with the Russia-Ukraine conflict and inflation spikes coupled with reserve bank reaction in the form of interest rate hikes. History dictates that inflation is bad for equities and markets have reacted by moving to the extreme risk-off. The question that remains is what will the impact be on the JSE or more specifically, emerging market styles? The results of the analysis show that low risk has emerged strongly (as expected) given the shift in sentiment. However, June also proved that growth showed signs of recovery, implying that the market may view the current market condition (inflation and imminent recession) as transitory. Our data driven forecasts indicate that the JSE should move to either neutral or positive territory over the next quarter and will probably be driven by a combination of value, rand hedge and momentum, however, with new information flowing fast and furious, only time will tell.

Dr. Daniel Page
Head of Quantitative Strategies
27four Investment Managers