The ups and downs of 2023

We are once again at the end of an eventful and volatile year. In January we were optimistic for the year as it looked like global inflation would be improving, the energy crisis following the Ukraine war was easing and China had reopened its economy following their strict Covid lockdowns.

Inflation fell dramatically this year, the energy crisis was less severe than expected and has been largely resolved, while China failed to reach the lofty expectations investors had and some concerns surfaced around the stability of their economy and the property sector in particular. This was in spite of the government’s efforts to reignite the economy with interest rate cuts and stimulus.

Interest rates have steadily been rising for the past 2 years and with inflation seemingly under control, expectations of rate cuts next year are providing some optimism going into 2024.

AI mania dominated the US stock market this year with the “Magnificent 7” (Apple, Microsoft, Google, Amazon, Nvidia, Meta and Tesla) growing an average of 92% this year and raising concerns that they could be headed to bubble territory. When taking out the growth from these stocks, the rest of the US market still has a way to go.

The war in Ukraine seems to be continuing without any sign of ending soon and most of the attention has shifted to the conflict in the Gaza strip.

In SA, loadshedding continued to weigh heavily on the economy with some experts saying that the economy would be growing at 3% without loadshedding, rather than the 1% we expect this year. The private sector has sprung into action in the last year and is expected to add 4GW of private production before the end of 2024, creating many jobs along the way. That, together with some big independent projects in the pipeline, the separation of supply and transmission, and Eskom’s improving efficiencies in their power plants could hopefully reduce loadshedding to a minimum in the coming years. Recent news shows that Government has started the process of procuring 2500MW of nuclear power. The State has also started the process of entering into public-private partnerships to tackle rail and ports.

In October, the BHI Trust scandal broke with thousands of investors discovering that they had lost over an estimated R2bn in a decades long Ponzi scheme. Reminding investors to be vigilant and only invest in regulated investment vehicles through trusted advisors.

South Africa was greylisted in February, due to the Financial Action Task Force (FATF) noting 20 deficiencies in SA’s process of preventing money laundering and terrorist financing. Over the past 9 months SA has made huge strides with 18 of the 20 deficiencies having been rerated. Of the 40 key recommendations made by the FATF, SA only has 5 left to address before the end of January 2025.

Of course we can’t leave out our victory at the Rugby World Cup in France. 2024 will no doubt be another eventful year, with important elections in SA, the UK and US.

We wish everyone a safe and relaxing holiday season and are looking forward to year ahead and thank you for your support throughout 2023.