2022 - Not The Year We Expected 

As is our custom at this time of the year, our newsletter looks back at the year past and future prospects. Last year we said “Local equities and government bonds look like they could be delivering good returns again in the year ahead, so we should be starting to feel a little wealthier.”

Instead, we witnessed:

  • Russia invasion of Ukraine
  • Massive shortages of oil and gas, particularly in Europe
  • Markets struggle in reaction to fears of a major recession
  • UK has 3 Prime Ministers
  • China’s zero Covid policy slows their economy
  • Inflation in the US and EU rises due to energy and overstimulation of the economy
  • Product shortages from lack of shipping, production of computer chips and others
  • Eskom struggles with power supply

The impact on markets was severe with the US S&P 500 and major European stock markets falling 25%. Our local ALSI index dropped by 14%.

But over the past two months we have seen signs of stock markets turning. The US and EU have recovered by 10% or more. Out local stock market has grown by 15%. China is getting to grips with how to emerge from Covid and Japan has at last opened its borders. With the biggest geopolitical risks looking like they may improve in 2023, next year should be looking better.

Locally we face a few more hurdles. Cyril has successfully been voted in for another term and hopefully this will lead to more assertive leadership. The Eskom team, without Andre de Ruyter, needs to be more creative in keeping the lights on.

We have a much better Government debt situation than could have been imagined, significantly lower than most other countries, independent power suppliers are working hard at sources of green electricity, and the ratings agencies are maintaining our credit rating, with a stable outlook.

How have investments performed over the year? Our preferred selection of balanced funds has grown by 2% YTD 2022 compared to the sector average of 1% YTD. Not a great performance, but it does vindicate our diversification approach where many funds were negative.

We thank you for putting your trust in us as we navigate a hazardous landscape. All of us at Apex Private Wealth wish you the very best over the festive season. Travel safely, enjoy the holidays and look forward to a year of improvement in 2023!