Global economic activity remains relatively firm, benefitting from gradually easing financial conditions and strong developed market real household income growth, as inflation subsides. The US economy is demonstrating resilience, with relatively strong consumption underpinned by a robust labour market, above average immigration and high aggregate household wealth.
Europe’s economy has stagnated given its export link to China’s weak economic recovery. It should benefit from an eventual rebound in global manufacturing activity from current low levels, lower energy prices and increased government investment (particularly in the south). Japan’s economic activity has been solid, with improving business investment and increasing private consumption amid relatively high wage growth. The very weak yen is aiding exports and inbound tourism.
Following a sluggish post-COVID recovery, Chinese economic growth remains weak in nominal terms due to persistent deflation. The property market has been very weak for a sustained period and consumer confidence is therefore depressed. Nonetheless, there is some strength 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, endemic organised criminal activity and consequent chronically low business confidence. Following the election, populist government scenarios have been averted (for now) with the formation of the government of national unity. There is a firm government commitment to the constitution, an intention to truly move to address the country’s structural problems and there have been some positive leadership changes in key ministries. Subsequently, there is cause for some optimism, that after the dramatic economic decline of the last 15 years, the economy may stabilise and the country may potentially head out on a more constructive path. Nevertheless, given the deep structural issues in the economy – most notably the sizable government debt burden and the large, unskilled, unemployed population – we believe that any meaningful uplift to the economic growth trajectory will take an extended period and is beset with risks.
The Islamic Equity Fund was up 6.0% in the third quarter and the fund has returned 10.2% pa over the last five years. Since its inception in 2009, the fund has returned 10.5% pa, outperforming the other general equity funds at 10.4%.
Positive contributors included PPC, Mr Price, Pepkor, Wilson Bayley Holmes Ovcon, and MTN. The key negative contributors for the period included the Northam Platinum, Sasol, Aspen, Anglo American and Glencore.
Global equity contributed positively, with the key contributors being JD.Com, Phillips, Siemens Energy and Evonik. Samsung Electronics, Micron Technology, Bodycote and Nutrien all contributed negatively.
The Islamic Balanced Fund was up 4.2% in the third quarter and has returned 9.6% pa over the last five years. Since its inception in 2011, the fund has delivered 7.7% pa. Positive performances were delivered by local equities, global equities and sukuks. Local equities also contributed positively towards performance for the quarter. The key positive contributors included Mr Price, Pepkor, PPC, MTN and Omnia. Negative contributors included Northam Platinum, Sasol, Aspen, Glencore and Anglo American.
Currently, our portfolios have high exposure to MTN, Omnia, Northam Platinum and Datatec 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