OUTvest Market Commentary -July

South African Markets

July was arguably the most devastating month in the post-apartheid era in South Africa, the country was battling a 3rd wave of the deadly corona virus and political instability. . The riots started as protest over the incarceration of former president Jacob Zuma. At first it seemed as if this was just an act of ethnic mobilization, but ended up as a sophisticated plot to destabilize the government. Satellites, water infrastructure and cargo carrying ammunition were targeted. The riots will have a negative impact on investor confidence and GDP growth.  

 President Cyril Ramaphosa labeled this as an insurrection. Even though this was a well-orchestrated plan to destabilize the country, it has exhibited the socio-economic conditions in South Africa. The triple challenge of unemployment (especially youth unemployment), poverty and inequality is the match that ignited the fire. KwaZulu Natal and Gauteng were the hardest hit provinces. The riots left damages estimated at R50 billion to the South African Economy as over 1100 retail shops were damaged, 3000 stores looted, 161 malls damaged, 8 factories burnt, 150 000 jobs on the line and 337 (and counting) have lost their lives [i].

What was heartwarming -was South Africans coming together to clean up the destruction left by the riots. The state insurer SASRIA says it has sufficient reserves to cover the losses, the government will also inject R3.9 billion capital into the state owned insurer l.[ii]

Despite the country facing turmoil, South African equity markets had a good July, the broader JSE/FTSE All share index was up by 4.1% over the month. The South African Equity market was driven by strong performances by the resources sector and corporate actions.[iii] The RESI 10( 10 biggest mining shares ) soared 11% in July, this was driven by the likes of Kumba Iron Ore and African Rainbow Minerals which posted 21% and 17% gains respectively.  The resources sector was buoyed by strong iron ore and PGM prices. Companies such as Amplats and Kumba reported record breaking earnings for the first half of the 2021 period.

Liberty Holdings and Imperial Logistics were the best shares on the JSE in July, this after both companies got buyout offers. Liberty holdings rose 33% in July after Standard Bank said that it intended to acquire the remaining shares it does not own in Liberty[iv]. Imperial Logistics was the 2nd best performing share in the board in July, the logistics company rose almost by 29% in July after it received an offer from a Dubai based global supply chain group, DP World offered R12.7 billion rands to buyout Imperial shareholders[v].

The Chinese crackdown on tech shares has weighed on the performance of both Naspers and Prosus, the tech heavyweights are seen as proxies to the Chinese tech giant Tencent who has been heavily affected by the Chinese crackdown.    

South African Bond yields spiked during the unrest, as the violence subsided South African bonds followed the global yields. The 10y government bond closed at 9.1% in July, South African nominal bonds were up close to 1% in July. Inflation Linked Bonds were marginally up .45%[vi].

South Africa continues to record strong trade numbers, the trade surplus for June was R57.7 billion – its highest level-from R54.4 billion in May[vii] . This is mainly driven by the commodity exports. The catalyst for commodity boom are precious metals such as rhodium which at some point fetched a price of $30 000 per ounce (currently trading around $20 000).


US Markets

The recent surge in COVID-19 cases has amplified talk of the US economy moving past the peak point of growth, even though the US GDP Q2 number came in below market expectations – the world’s largest economy grew 6.5% in 2nd quarter of 2021.[viii]

The FED’s recent statement suggest that the central bank may start tapering as early as October, this comes after inflation hit a 13 year high in June.[ix]

Job creation in the private sector tumbled in July as fears in the spread of the delta variant, employers added 330 000 jobs in July compared to the 680 000 in June.[x] The FED still echoes the transitory theme and vows to keep monetary policy loose and interest rates low until the employment picture shows greater progress.

It was once again a good month for US equity investors in July. The broader S&P index closed 2.2% in the green in July and 17.2% year to date. To date 294 companies in the S&P 500 have reported on Q2 earnings, 88.7% posted better than expected earnings. Earnings are expected to be 82.9% from the year-over-year Q2 2020. [xi]

July saw 6 out of the 11 sectors post gains in July, with Real Estate being the best performer at 3.87% and Energy being worst performer at 7.86%.

US fixed income indices were mostly positive for July, with the 10y treasury closing just below 1.2%[xii].

European Markets

European economies are returning to normal with most of their restrictions being relaxed. This will be widely welcomed by the hard hit tourism sector. The spread of the delta variant still poses a huge threat in Europe’s recovery, but the vaccination program continues to be at pace with 60% of the population in the four largest areas at least receiving one jab. 

The Eurozone economy expanded by 2.3% in the 2nd quarter of 2021, compared to the same period last year, the latest GDP reading represent a 13.7% increase. The Portuguese and Austrian economies registered the highest quarterly growth rate 4.9% and 4.3% respectively.[xiii]

Flash purchasing managers’ index (PMI) data offered encouragement that the euro zone recovery was gathering pace last month. Business activity grew at its fastest rate in 21 years, with a robust improvement in service sector activity more than offsetting a modest decline in the manufacturing PMI that was linked to supply chain disruption[xiv]

European shares were up 1.78% in July reaching all-time highs, with tech shares leading the charge gaining close to 6%.

Q2 earnings took center stage, with Renault, BNP Paribas and L’Oréal reporting on their results.

BNP Paribas reported a 26% annual rise in net profit for the second quarter to 2.9 billion euros ($3.44 billion), exceeding market expectations on the back of a rebound in business activity. The French lender’s shares slid 1.2%.

Renault posted a quarterly net profit of 354 million euros for the first half of the year, up from a substantial loss of nearly 7.3 billion euros for the same period last year as the pandemic shut down production across the industry. The French automaker forecast a full-year profit in 2021 despite the challenges caused by the global semiconductor shortage. Renault stock fell 3%.

L’Oréal reported an acceleration in second-quarter sales growth in part due to a surge in U.S. makeup sales as lockdowns eased. Shares gained 0.3%.[xv]

All of S&P European fixed income indices rose this month. Bouncing back after last month’s decline, the S&P U.K. Inflation-Linked Bond Index came firmly top of the table, it rose 6%.

Emerging Markets

Investors around the world are licking their wounds, after the Chinese Communist Party continues to cause havoc in financial markets in their recent regulation crackdowns. According to Bloomberg, investors lost $1trillion in the last week of July[xvi]. The NASDAQ golden dragon China index, which tracks 98 US-listed Chinese shares fell 15% in two daysat some point in end July.

Chinese Tech giant Tencent lost 40% of its value within days. The edtech is the latest victim of the crackdown.

The Chinese Communist Party’s heavy hand on tech shares as well felt by broader Emerging Markets, the S&P Emerging Markets BMI lost nearly 6% in July. Almost all Emerging Markets had a bad July, with another heavy weight Brazil losing 6.5% in July.

The only rose amongst the thorns in the emerging markets is the Turkish equity market which gained 6% in July.

Funds on the OUTvest platform

Funds on the OUTvest platform performed extremely well in July, both in absolute terms and relative to peers. This was driven by strong performance in both local and global equity markets. The diversification strategy helped shrug off, heavy losses suffered by the two tech heavy weights Prosus and Naspers who account for about a quarter of the total market capitalization of the JSE.

The CoreShares OUTaggressive index fund returned 4.25% for investors in July, it also managed to beat 88% of its peers in the same ASISA category.

The CoreShares OUTmoderate fund is up 22.44% for the year ending July, in the same period the fund out-performed 88% of its peers.

The CoreShares OUTstable index fund posted gains of 2.74% for the month of July, the fund also managed to beat 98% of its peer.

The fund that has the lowest exposure to equities, the CoreShares OUTcautious index fund was up 16.54% for the year ending July, the fund out-performed 95% of its peers.

All OUT- funds managed to beat more than 60% of its peers for 3 years ending July 2021.


For a more detailed look at the month please see downloadable PDF here.


OUTvest is an authorised FSP. All our investments are exposed to risk, not guaranteed and dependent on the performance of the underlying assets. 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.


[1] https://www.cnbc.com/2021/08/02/south-africa-unrest-and-covid-measures-are-starting-to-derail-its-economic-recovery.html

[1] https://www.businesslive.co.za/bd/companies/financial-services/2021-07-13-sasria-says-it-is-sufficiently-capitalised-to-settle-unrest-claims/,


[1] Anchor Capital July 2021

[1] https://www.liberty.co.za/media-insights/standard-bank-group-announces-firm-offer-to-buy-100-percent-of-liberty-holdings

[1] https://www.businesslive.co.za/bd/companies/industrials/2021-07-08-imperial-logistics-rockets-after-r127bn-buyout-offer/

[1] S&P indices July 2021

[1] https://www.dailymaverick.co.za/article/2021-08-01-cashing-in-on-commodities-south-africa-posts-record-trade-surplus-in-june/

[1] https://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20210802-taking-stock-on-china.pdf

[1] https://www.cnbc.com/2021/07/13/consumer-price-index-increases-5point4percent-in-june-vs-5percent-estimate.html

[1] https://www.cnbc.com/2021/08/04/private-companies-added-330000-jobs-in-july-according-to-adp-far-short-of-the-653000-estimate.html

[1] Market Attributes: U.S. Equities July 2021 (spglobal.com)


[1] S&P indices July 2021


[1] JP Morgan Insights  July 2021

[1] https://www.cnbc.com/2021/07/30/europe-markets-near-all-time-highs-with-earnings-center-stage.html

[1] https://www.bloomberg.com/news/features/2021-08-01/china-tech-crackdown-communist-party-policy-changes-behind-1-trillion-selloff

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