Global economic activity remains steady, benefiting from gradually easing financial conditions and strong developed market real household income growth due to falling inflation and higher wages. The US economy is demonstrating resilience, with relatively strong consumption underpinned by a robust labour market, healthy immigration and high aggregate household wealth.
Europe’s economy, which has stagnated given its export link to China’s weak economic recovery, should benefit meaningfully from an eventual rebound in global manufacturing activity from low levels, lower gas prices and increased government investment (particularly in the south). Japan is maintaining solid economic activity, with improving business investment and increasing private consumption amidst high wage growth. The very weak yen is aiding exports and inbound tourism.
Following a very slow post-COVID reopening recovery, Chinese economic growth is gradually accelerating but is weak in nominal terms due to persistent deflation. Property market activity has been considerably weak for a sustained period and has depressed consumer confidence. Nonetheless, there is an improvement in exports, manufacturing and infrastructure spending.
Economic activity in South Africa is severely constrained by acute underperformance of transport infrastructure, poor service delivery from weak and revenue-hungry municipalities, inadequate (albeit stabilising) electricity supply and chronically low business confidence. Following the election and the formation of the government of national unity, there have been positive leadership changes in key ministries and a commitment to the constitution and to addressing the country’s structural problems. Consequently, there is optimism that. after the dramatic economic decline of the last 15 years, the economy may stabilise and the country may potentially be setting on a more constructive path. Nevertheless, given the deep structural issues in the economy – most notably the sizable government debt burden and a large, unskilled population with high unemployment levels – we believe that any meaningful recovery will take an extended period of time and is beset with risks.
The Islamic Equity Fund was up 3.1% in the second quarter, underperforming other general equity funds. It has returned 5.9% pa over the last three years. Since its inception in 2009, the fund has returned 10.2% pa. The key negative contributors for the period included Anglo Platinum, MTN, Metair, Glencore, PPC and Datatec. Positive contributors included Anglo American, Omnia, Mr Price Group and Northam Platinum. Global equity contributed negatively, with the key detractors being Albermarle, Continental, Panasonic, Medtronic and Johnson Matthey. Siemens Energy, Koninklijke Philips, Evonik, Shell and Johnson Electric all contributed positively.
The Islamic Balanced Fund was up 1.9% in the second quarter, underperforming competitor funds. It has returned 6.1% pa over the last three years. Since its inception in 2011, the fund has delivered 7.5% pa on average. A negative performance from global equities was the main factor underpinning performance in the second quarter. The key negative contributors included Anglo Platinum, MTN, Metair, Glencore and PPC. Positive contributors included Anglo American, Omnia, Mr Price Group and Northam Platinum. Global equity contributed negatively to performance, with the key detractors being Albermarle, Continental, Panasonic, Medtronic and Johnson Matthey. Siemens Energy, Koninklijke Philips, Evonik, Shell and Johnson Electric all contributed positively.
Currently, our portfolios have high exposure to PGM miners, Datatec and MTN together with a diverse range of other mispriced stocks, including an array of deeply discounted local mid-cap stocks.
By: Camissa Asset Management investment team
Camissa Asset Management (Pty) Ltd is a licensed FSP.
www.camissa-am.com