Anglican Church of Southern African

Monthly Investment Report - Retirement Fund

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November 2018

The South African Reserve Bank (SARB) raised the repo rate by 25 basis points to
6.75%. Market consensus was split down the middle and so too the Monetary Policy
Committee, with three members voting for a hike, while three members voted for a
hold. The markets cheered the decision as the rand and local bonds rallied. The central
bank stated that it assessed the risks to the inflation outlook to be skewed to the upside
while also emphasising concerns of tighter global financial conditions, the weaker rand,
increased wage growth and higher oil prices.

Inflation numbers showed that consumer prices increased by 5.1% year-on-year (and
increased 0.5% over the month). This was mainly due to an increase in the cost of
transport because of higher fuel prices. Other third quarter data showed a mixed but
slightly positive outlook for growth for the period. Manufacturing production ended the
quarter up 1.7% (quarter-on-quarter) while mining production declined by -2.2%
(quarter-on-quarter). Standard & Poor's kept South Africa's sovereign credit rating and
outlook unchanged but warned of increasing risks from a low growth outlook, high
contingent liabilities, fragile state-owned entities, weakening fiscal prospects and the
debt burden.

The brief halt of tensions between China and the U.S. coupled with the U.S. Fed's
uncertainty regarding the trajectory of interest rate hikes helped boost global risk
sentiment. This, along with the SARB's interest rate hike, saw the rand strengthen
6.1% against the U.S. dollar, 6.0% against the euro and 6.3% against the pound for
the month. The rand strength could also be seen in the local bond market with the All
Bond Index returning 3.8% for the month. Considerable outflows were seen in the
local equity market with the FTSE/JSE All Share Index shedding -3.1% for the month.
On a sector basis, the Resource 20 was significantly lower, down -11.8%, while the
Industrial 25 Index was down -0.9%. Support was found from the Financial 15 Index
which was up 2.5%. The S.A. listed Property Index extended last month's losses to finish -1.2% in negative territory, while cash returned 0.5%.

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