SA market performance:
The Capped SWIX 40 returned 1% from the end of April, while SA bonds were
up 0.8% and SA Listed Property up 0.2%. Interestingly, the All-Share Index had gained 3.4% up until 28 May, but lost 2.4% in the last two trading days post the SA election as the results became more evident. Industrials (+1.7%
m/m) and Resources (+1% m/m) were the best performers within equities, SA Financials finished the month down 0.1%. The tech gains globally were reflected on the local bourse with Prosus and Naspers gaining 5.8% and 3.4% respectively. The resource sector benefitted from the continued rally in industrial metal prices with gains in the Industrial Materials (+5.5%) and
Industrial Metals (+1.4%).
 

SA inflation outlook:
Food inflation has tracked downwards for six consecutive months to 4.5% on the latest (April) data. This has helped headline inflation moderate to 5.2% y/y. However, the expectation is for inflation to moderate further and stabilise at 4.5% in Q2 2025. 
 

SARB rate decision:
The Reserve Bank’s Monetary Policy Committee (MPC) unanimously left the repo rate unchanged at 8.25% at the May meeting and remains cautious. There are a number of uncertainties that warrant this caution: an unknown SA political structure, US Fed policy, and the current geopolitical landscape. Market expectations remain for two interest rate cuts of 25bps each towards the end of this year.
 

SA macro:
Credit growth remains weak with Private sector credit extension (PSCE) growth slowing to 3.9% in April from 5.2% in March. Any interest rate relief would be beneficial to this growth driver for the economy. GDP for 1Q24 came in below market expectations, contracting 0.1% q/q. It is noted that the first quarter had high load-shedding levels, which will be counteracted by no loadshedding for the two months to the end of May, which should produce favourable quarter-on-quarter comparatives.