In May our average prudential balanced portfolio returned minus 0.65% (April 1.32%). Top performer is Allan Gray (1.33%), while Stanlib (minus 1.74%) takes bottom spot, both having switched their log positions from the previous month.

Going by the general tone in Europe and recent utterances by President Obama, the likely direction of monetary and fiscal policy in Europe is one of more stimulation as the road out of the financial crisis. This implies more ‘fiscal easing’, more printing of money and more short-term capital looking for yields in developing countries such as South Africa. The scenario of declining foreign portfolio flows, a weakening Rand and rising interest rates, is therefore likely to only materialise in the next 2 to 3 years and the current Rand weakness is likely to be of a temporary nature.