The SA Reserve Bank stunned the market with a narrow 3:2 vote to hike the repo rate by 50 basis points instead of the widely expected 25 bps, prompted by sharply higher inflation estimates. While equity markets received this as a negative on the day due to the economic headwinds implied, the rand rallied almost 2%, partly closing the gap created by the Fed’s aggressive rate hike path with an ever-more attractive carry trade by investing in SA fixed income.

The All-Share Index recorded a 2.8% gain in April, while the Capped SWIX rose by 3.4%, leaving it amongst the best-performing emerging market bourses YTD. Gold counters and platinum group metal stocks outperformed in April, buoyed by higher commodity prices, while SA-focused shares were patchy as ongoing loadshedding continued to weigh heavily on sentiment. The Resi-10 soared 4.2%, while the SA Listed Property Index advanced by 3.8%, and the Indi-25 rose 3.0%. The Fini-15 also gained ground ending the month up 1.3%.

On the local economic data side, March headline inflation, as measured by the consumer price index (CPI), rose slightly (its second consecutive upward surprise), coming in at 7.1% vs February’s 7.0% print. For the month, CPI rose 1.0% in March
– its biggest monthly increase since July 2022 when it came in at 1.5%.

Stubbornly high food price increases were again at the forefront of this latest increase, remaining upwardly sticky and contributing about one-third of the increase in the headline reading. Local retail trade sales shrank for a third consecutive month ending down 0.1% in February, compared to a 1.5% increase decline in January.

The South African 10-year government bond yields drifted higher in April, ending the month at 11.4%, the highest level since late 2022 when the prospect of impeachment of President Cyril Ramaphosa rattled foreign investors. The drift higher in local bond yields came despite a generally benign environment for global bond yields in April.

Click the document download for full details.

Downloads