Back to all articles

January 2022 market review

Stocks falling
| Market Forces

January 2022 market review

January was the month in which fears around inflation and the tempo of monetary and fiscal policy adjustment finally sent markets plummeting. The Nasdaq-100, for example, was pulled down more than 10% from its November closing record. That’s a market correction.

Locally, retail inflation printed at 5.9% and the SA Reserve Bank (SARB) hiked the repo rate to 4%. Four members of the MPC voted in favour of a 25 basis points hike, while one member voted to hold the rate. The SARB also flagged upside risk to inflation. Prime rose to 7.5%.

Big tech tumbles in January

After several months of racing ahead, world stock markets stumbled in January. The MSCI World index (developed market global equity) lost 8.20% in rand terms for the month. The strengthening rand did add to this negative return, as it gained 3.07% against the US dollar and 4.45% against the euro during the month. Tech stocks were hit particularly hard, with the Nasdaq-100 down 11.31% in January. The local equity market kept its composure amid the global correction and the FTSE/JSE All Share Index (ALSI) added 0.86% in total returns for the month. The local listed property index (SAPY) gave a return of -2.85%. SA bonds (ALBI) gained 0.85% during the month and cash (STeFI) returned 0.34%.

The past year has seen a rotation from Growth to Value

Evaluating the past 12 months, all major market indices delivered strong returns. Property was the best performing asset class at 37.44%, followed by the ALSI at 23.89%. Among the stocks listed on the ALSI, Value-style stocks were back in favour at 42.50% over the past year. Growth stocks yielded a total return of 8.93% in comparison. The ALBI returned 8.49% for the year, and cash gave 3.85%. The rand weakened 2.77% against the US dollar and strengthened 5.17% against the euro. Looking towards international markets, the MSCI World Index gave South African investors 19.76% in rand terms.

World stocks remain the 5-year winner

Over the past five years to January 2022, the ALSI returned 10.63% per year. In comparison, the world stock market – as measured by the MSCI World Index – returned 16.42% annualised in rand terms over the five years to 31 January 2022. SA bonds gave 8.95% per year and cash 6.19%. Listed SA property (the SAPY) is lagging other asset classes significantly at -5.21% p.a.

Table 1: Total returns to 31 January 2022

January YTD 1 year 5 years
ALSI (equity) 0.86 0.86 23.89 10.63
SAPY (property) -2.85 -2.85 37.44 -5.21
ALBI (bonds) 0.85 0.85 8.49 8.95
STeFI (cash) 0.34 0.34 3.85 6.19
MSCI World -8.20 -8.20 19.76 16.42
$/ZAR -3.07 -3.07 2.77 2.80
Euro/ZAR -4.45 -4.45 -5.17 3.53

Source: Morningstar | Total returns annualised to 31 January 2022

Print Friendly, PDF & Email
Show Comments

Leave a Reply

Your email address will not be published.