In December our average prudential balanced portfolio returned 1.24% (November 1.8%). Top performer is Metropolitan (2.57%), Investec (- 0.6%) takes bottom spot.

After the down grading of South Africa’s debt rating by international rating agencies, the Rand weakness continued, it briefly breaching the R 9 to the US$ hurdle. This should dampen the enthusiasm of short-term foreign investors as will the continuing negative inflation differential between SA and its major trading partners and the fact that SA Reserve Bank kept the Repo rate unchanged. Foreign investment flows, particularly the more speculative flows, are likely to subside which should impact negatively on our local equity and bond markets.

A weaker Rand obviously benefits local exporters and local manufacturers and will make them more competitive against imports. Imports, including fuel, will become more expensive and this should filter through to raised inflation levels and to higher interest rates eventually.