The second quarter of 2024 painted a diverse picture across global
markets, with notable disparities in regional and sector performances.
Emerging markets shone brightly, as evidenced by the MSCI EM USD
Index’s impressive +5.0% rise (YTD: +7.5%), outpacing the MSCI World
USD Index, which posted a +2.6% gain (YTD: +11.8%) for the same
period. This stellar performance was primarily fuelled by robust
returns from India, Taiwan and China.
Yet, despite this quarter’s divergence, developed markets have
maintained a comfortable lead for the first half of the year. In local
currency terms, Japan’s equity market (MSCI Japan) led the pack with
a striking +21.3% increase, bolstered by the persistently weak yen
supporting the country’s export-heavy sectors. Close behind, the US
markets represented by the S&P 500 returned a solid +15.3% for the
first half — marking one of the top-seven best starts in the past 35
years. However, it’s crucial to note that these gains were not evenly
distributed across the index. The bulk of the returns were driven by the
top seven growth stocks, particularly the mega-cap tech giants, which
heavily influenced the S&P 500’s overall performance. The rest of the
US market saw significantly more subdued returns.
Turning to South Africa, the recent elections brought the historical
inauguration of the Government of National Unity (GNU) under
President Cyril Ramaphosa. This sparked initial optimism among
investors, leading to a strong rally in local assets. However, the
market’s exuberance tapered as political manoeuvring within the GNU
became apparent. Despite this, South African markets concluded the
quarter positively, gaining +8.2% (YTD: +5.8%).
On the brighter side, the new administration is focusing on tackling
significant economic challenges, upholding constitutional integrity,
and professionalizing public services. Although hurdles remain —
including fiscal consolidation and coalition negotiations — there’s a
renewed emphasis on private sector involvement in infrastructure and
energy sectors. This positive momentum is expected to stimulate
economic activity and boost investor confidence, potentially
transforming past vicious cycles into virtuous ones — though patience
and perseverance will be essential.
Article by Corion Capital