It is that time of year again where everywhere we look, we know we are fast approaching the end of the year, and we are reminded with flashing lights and beautifully festive decorations, Christmas is just around the corner. With all the hype surrounding the festive season, it is difficult not to get carried away yourself, because it is, after all, most people’s favourite time of year.
We are always looking for reasons to explain why markets do move, whether up or down, but so many of them overlook the holiday spirit. When we take a look at the performance of the FTSE/JSE All Share Index over the December month over the past 50 years, 65% of the December months have provided positive returns.
At the time of writing this article, since 1970, the FTSE/JSE All Share Index has grown by 11.63% per annum (excluding dividends), while the MSCI World Index in ZAR has grown by 13.09% per annum (excluding dividends) over the past 15 year period. Needless to say, these figures do not carry any guarantees for future performance, but historical data does provide a good indicator of what the future may hold.
In addition to that, the investment environment we currently find ourselves in, with the world seemingly having been turned on its head, including war, inflation levels which haven’t been seen in decades, and a bit closer to home, the worst year of loadshedding so far. If markets can provide positive returns in December, this will go a long way in restoring confidence, and ensure the 4th quarter in 2022 has provided a significant positive return which may see the FTSE/JSE All Share Index finish off the year in positive territory for 2022.
As positive as historical data regarding December over the last 50 years may be, when each month is viewed in isolation, it was interesting to note that, over a 12-month rolling period (i.e. from one December until the next), it was also the worst-performing of all the months, despite being positive 65% of the time, which therefore bodes well for the proceeding calendar year.
The fact remains that we still find ourselves in an extremely volatile investment environment which cannot be ignored. I do however see more and more value emerging in our local market & international markets, which does present an opportunity for investors.
Please don’t forget that every person over the age of 18 is allowed to invest up to R1 million directly offshore every calendar year without requiring tax clearance from SARS. Please note that this does include any funds you may have used for travelling outside the boarders of South Africa in a particular year. If you haven’t made use of your allowance as yet this year, there is still time to do so, and it may be beneficial with the possibility of South Africa being Grey listed as mentioned in our previous newsletter, which could make it very onerous to invest funds directly offshore for the simple reason that we as South African investors would then be seen as “higher risk” investors.