Anglican Church of Southern African

Monthly Investment Report - Retirement Fund

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January 2019

Local equities ended the month in positive territory amid markets oscillating between
gains and losses. Investors had to navigate a host of developments such as global
growth concerns and consequences regarding monetary, trade and political policy.

The FTSE/JSE All Share Index fell in line with the optimistic global sentiment and
returned 2.8% for the month. On a sector basis, the Resource 20 Index was up 2.7%
for the month while the Industrial 25 Index gained 0.9%. The Financial 15 Index
presented a solid return and was up 6.7% during the same period. After a significant
underperformance in 2018, the S.A. listed Property Index started off the year on the
right note, returning an impressive 9.1%.

The rand claimed the spot of the best-performing emerging market currency for the
month of January. The currency appreciated 7.7% against the U.S. dollar, 7.8% against
the euro and 5.2% against the pound. The rand benefitted from the favourable risk-on
backdrop which was further boosted by the U.S.

Federal Reserve's more dovish stance. In terms of fixed income, vanilla bonds gave a
positive performance as reflected in the All Bond Index which gave back 2.9%. Inflationlinked
bonds followed the same pattern as seen in December, with yields falling about
10 to 15 basis points across the yield curve. This came amid investor's inflation
expectations declining.

As was widely expected, the South African Reserve Bank kept the repo rate
unchanged (at 6.75%). The central bank's inflation expectations have improved
significantly with headline inflation for the 2019 year now estimated to average at
4.8% in 2019 (this is down from 5.5% previously). The inflation forecasts are based
on the interest rate path that is generated by the central bank's internal projections
model. The model now forecasts only one interest rate increase of 25 basis points,
to reach 7% by the end of 2021. This is a decrease from the previous estimate of
three rate hikes of 25 basis points each by end of 2020.

S.A.'s growth estimates from the International Monetary Fund (IMF) were unchanged
for the 2019 and 2020 year and remains at 1.4% and 1.9% respectively. Other local
data released included the FNB/BER Consumer Confidence Index which was also
unchanged. There was, however, an improvement in two of the three sub-indices
namely expected economic conditions and financial prospects.

Local headline inflation print slowed from 5.2% in November to 4.5% in December
2018 (year-on-year). This was in line with expectations. The release of the South
African Chamber of Commerce and Industry's monthly business confidence index
showed a drop from 96.1 in November to 95.2 in December 2018. Manufacturing
production slowed in November 2018, rising to 1.6% after a 2.8% increase in the
previous month.

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