As the year draws to a close, it is helpful to look back and see what has happened in the stock market and how investments have grown this past year. Understanding what happened this past year is helpful, as it influences accepted returns going forward.
In November 2012 I blogged about the stock market and my predictions for what the next 10 years would hold. I stated that the Rand would depreciate and the South African stock market would flatten as we could expect lower returns than previously. This year has seen the Rand weaken around 20% and the stock market has performed better than I had thought. Great news for investors!
If you were invested offshore, either directly or through asset swap, your unit trusts should have performed well. Some offshore unit trusts (asset swap unit trusts) have performed between 25 and 46% this past year. If you were invested in the stock market, you would have also done well as many equity funds performed around 18-20% for the past year. It is however the end of a 10-year bull run and we can expect to see returns flatten in coming years.
Unfortunately the bond market dropped due to foreigners selling off a net R5.5 billion of our bonds, at the end of May. This has been the biggest sell-off since September 2011. It is estimated that these markets are up to 34% owned by foreigners. A big selloff on our markets would affect yield negatively, as we saw the bond market drop substantially.
The property sector grew by 10.3% in 2011; 15.2% in 2012 and this year saw similar returns for this sector. However, as bond yields drop many warn that property yields will follow suit. For more information about the property market, click here.
Overall, most investors have had great returns this past year. In the next blog I will discuss this coming year and what we can expect from markets.