Market Commentary - June 2021

South African Market 

The with the slow vaccination program ,South Africa 3rd wave of COVID-19 infections, the seven day average in new cases ending June 30th was just above 16000i. The Delta variant that was first identified in India, seems to be the driving force behind the 3rd wave as it is said to be significantly more infectious.

The surge in new cases, hospital admissions and climbing death rate, has forced President Ramaphosa to introduce firmer restrictions, this will have a negative impact on the economic recovery thus far and could push many more businesses in severely affected industries, such as tourism into bankruptcy.

The South African Rand went from one of the best performing Emerging Markets currencies earlier this year, to the worst performing Emerging Markets currency against the US dollar in June. During the month the Rand lost 3.6% against the US dollar, after it reached a 3 year high of R13.43 to 1 US Dollar, fears of a prolonged lockdown restrictions due to higher Covid-19 new cases in June might be the cause of the weakness in the currencyii.   

South Africa recorded its 13th straight consecutive trade surplus in May, year to date, trade surplus is sitting at record 202 billion Rands, with exports increasing over 50% since the beginning of 2021.iii 

Commodity sales dominated exports once again, with precious metals (gold and platinum), steel products and minerals (coal) accounting for two thirds of total exports. The major economies big infrastructure programs has boosted the demand for South African commodities.iv 

South African equity markets had a negative month in June, this is the first time since October 2020. The South African top 50 index lost 2.7% in the month of June and this was led by sell off in Prosus and Naspers which both represent about a quarter of the JSE total market cap. Investors are wary of the share swap between the two techs heavy weights, proposed by management. The Information Technology sector lost more than 13% in June alone, Altron and Datatec were the hardest hit, losing 28% and 11% respectively.v  Another hard hit sector in June was the Resources sector, with Harmony Gold and Golds losing 28% and 26% respectively, this was caused by mainly the gold losing its shine in June, the yellow metal lost 7% in the Month of  

Most of the South African equity indices were in the red in June, with the exception being the former laggard, listed property. The broader property index gained 2.8% in the month of June. This was led by Vukile Property Fund and Sirus which gained 14% and 12% respectively.vii 

The South African Fixed Income space was a story of two tales in June, with the Sovereign bonds gaining more than 1% and Inflation linkers losing 1.5% of its value.viii


US Markets 

The US vaccination drive seems to be bearing fruit. New cases and deaths seem to have stabilised. The world’s most advanced economy has administered over a million jabs a day on average, at this rate it will take just 4 months to fully vaccinate 75% of the population.ix

The US economy added 850 000 jobs in June, despite the good jobs report, unemployment rate edged higher in June at 5.9% from 5.8% in May.x

The Fed expects inflation to be 3.4% this year even though the May number was at 5.2%xi (coming from a low base ), Fed Chair Jerome Powell uttered more hawkish comments in the last Fed’s meeting, suggesting that – the rate hiking cycle could come soon.

The International Monetary Fund raised its US growth projection to 7%, it attributed the upgrade to Joe Biden’s stimulus program and robust vaccine drive. 

US equities had a good June, with the broader S&P 500 index gained 2.33%. The technology sector which lagged most of the year was the star performer in June, with gains of nearly 7% for the monthxii. The surge in oil prices (both WTI and Brent Crude) has lifted energy shares, the black gold is up more than 40% since the beginning of 2021 and energy shares were up by a similar margin.

The US interest rate curve flattened as long-term rates drifted lower, with US 10-year bond yields ending the month 0.13% down at 1.46%.

With the Federal Reserve (Fed) unwilling to change policy before year-end, the forward curve suggests a 10-year U.S. Treasury yield range of 1.5% to 2.0%. While negative real yields will be frustrating as growth and inflation spread.


European Markets 

Even though European countries are facing a surge in new cases due to the Delta variant, it seems it has not led into higher hospital admission, possibly indicating that vaccines work well against the new variant. 

Euro zone manufacturing activity grew at its fastest pace on record in June, according to IHS Markit’s final manufacturing PMI (purchasing managers’ index) on Thursday. The reading of 63.4 was up from an initial 63.1 “flash” estimate, and the sharpest incline since the survey began in 1997.xiii 

U.K. factories also rode the recovery, though the PMI reading dipped to 63.9 from a record high 65.6 in May. Inflation pressures were also palpable as supply chain challenges caused by the pandemic sent input costs soaring.

European equities posted positive gains in June, for the 5th consecutive month. The EUROSTOXX 350 was up 1.7% in June and 15% up for the first half of the year.xiv 

European Fixed Income Indices were flat for the month of June.


Emerging Markets 

Emerging Markets central Bankers have been raising interest rates in fear of surging inflation (except South Africa), through their communication we can expect more interest rates hikes in the near future. Brazil and Russia hiked rates earlier this year. In June Czech Republic, Hungary and Mexico hiked rates.xv 

Emerging Markets Central Banks will try and keep inflation under control by raising interest rates, which will increase the cost of borrowing for consumers and help slow the economy – investors in short dated bonds may find bonds may not provide attractive returns as a result of this.

Emerging Market equities were under pressure in the month of June, the broader MSCI Emerging Markets Index lost 1.38% in the month of June.



Due to pull back in South Africans equity markets and losses suffered by inflation linkers, three of the CoreShares OUT funds delivered negative returns in June. 

The CoreShares OUTaggressive Index fund returned only .09% for the month of June, even though the fund did not perform well in absolute terms, the fund performed extremely well when it came to relative performance against its peers. Due to its higher allocation to global equities the fund managed to outperform 96% of its peers for the month ending June.

The CoreShares OUTmoderate, OUTstable and OUTcautious Index funds all posted negative gains in the month of June, this was due to the allocation to South African equities and inflation linked bonds the funds are exposed to.

Even though our funds did not have a good month in June, the 1 year and 3 year performance of our funds still look positive.

4 out of 5 of our funds were able to beat more than 50% of their peers in the same ASISA category in a 3 year rolling period ending June 30th 2021.


Source: Morningstar NAV  to NAV, Oldest share class


SP indices.png

Source : S&P indices 


OUTvest is an authorised FSP.  All investments are exposed to risk, not guaranteed and dependent on the performance of the underlying assets of each portfolio. Past performance is not indicative of future performance.  Individual investor performance may differ as a result of fees, the actual investment date, the date of reinvestment and dividend withholding tax. Ts and Cs apply.









v S&P Indices June 2021



viii S&P indices  June




xii S&P Indices 


xiv S&P indices June 2021




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