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Investor report and newsletter for the fourth quarter of 2023

Investors enjoyed a strong recovery in both equity and bond markets in the last quarter of 2023. Pleasing inflation figures pointed to the possible end of rising interest rates, boosting returns as the market started to look through higher interest rates and inflation. The “most anticipated recession in history” did not materialise. For now, at least. The ascendance of Artificial Intelligence during the year providing the stimulus for the market. The magnificent seven, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, continues to account for most of the market returns in 2023.

Inflation is expected to decline globally into 2024, but it will be varied and uneven. We anticipate that global police rates in general will remain higher for longer and probably settle above pre-pandemic levels. Higher interest rates will impact on global growth, slowing during the year. Geopolitics is elevated and remains a concern. Cash and bond yields are more attractive and will be competing for a place in portfolios that were previously equity heavy. Equity valuations are creeping up.

The fundamentals for South Africa remain poor. Failing systems, such as power and rail and acute corruption, will drive sentiment. We anticipate rates to remain steady until the local election risks pass, USA rates start to decline and the weaker fiscal pressure eases. While equity valuations are attractive, here too the high yielding domestic bonds are also a consideration.

Considerable uncertainties remain, both economic and geopolitical, which will impact sentiment and market volatility can continue to be expected. 

The table below highlights the performance

of selected markets and asset classes to 31 December 2023.

Source: MSCI, Datastream, Bloomberg, Visio and Factset

An investment objective to provide inflation beating returns over time remains more crucial than ever. Diversification across asset classes will be key. It is essential to focus on your unique investment horizon and financial requirements to optimise your portfolio accordingly.

We welcome any feedback or questions

Kind regards

The BAYMONT Wealth team


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