In January the average prudential balanced portfolio returned -2.08% (Dec: 0.57%). Top performer is Allan Gray (-0.12%); while Namibia Asset Management (-4.03%) takes the bottom spot. For the 3 month period Allan Gray, for the 6th consecutive month takes top spot, outperforming the ‘average’ by roughly 5.4%. On the other end of the scale EMH Prescient underperformed the ‘average’ by 3.9%.

The winds have changed

For many years Namibia’s big brother SA, and with it Namibia too, has experienced a tidal lift of its entire financial system. It started off with the commodity run that led to SA ALSI growing by a nominal 15.8% per annum from August 1998 to its peak in April 2015, equivalent to a real growth of 8.3%, excluding dividends. And this period includes the financial crisis that saw the index declining from its October 2007 peak of 28,400 to a trough of 16,500 in February 2009.

Foreigners piled into local equities at an annualised rate of between R 60 billion and R 80 billion. For a long time the Rand held up well on an exchange rate to the US Dollar of between 5 and 8 up until the first quarter of 2012. Interest rates were very low as the result of the US Fed’s stabilization of its financial system post financial crisis with its large scale asset purchase programme that had money flowing freely across the globe and in particular into commodity based economies like SA.

These good times have come to an end now, even though much later than we had anticipated where we expected the Fed to start raising interest rates in 2012. As we know now, this only happened in December 2015. The fact that the Fed stopped its large scale asset purchase programme was largely negated by a virtually simultaneous entry by the ECB with a similar programme.

The anticipated increase of the Fed repo rate in 2015 was the turning point for our financial markets and the tail winds our markets experienced have now turned into head winds.