July 3, 2023

Manager Comments – 30 June 2023

In light of the current economic climate, our investment strategy focuses on portfolio diversification and offshore allocation. This approach aims to mitigate domestic risks associated with load-shedding while taking advantage of favourable economic data and growth prospects in the US and EU markets. We have chosen to avoid investments in China due to the faltering post-lock down economic recovery.

South Africa

Headline consumer inflation cooled for a second consecutive month in May to 6.3% from 6.8% in April. May’s reading is the lowest since April 2022when the rate was 5.9%. This is still above the upper limit of the South African Reserve Bank’s target range. As a response, the Monetary Policy Committee increased the repurchase rate by 50 basis points to 8.25% per year, effective from May 26, 2023. Headline inflation is projected to fall back within the SARB’s target range in the second half of 2023. However, due to factors such as power cuts, weaker commodity prices, and external conditions, real GDP growth is expected to decelerate sharply to 0.1% in 2023.

United States

The annual inflation rate in the US likely fell to 4.1% in May 2023, the lowest since March 2021, primarily driven by lower energy prices. The Federal Reserve responded by raising its key interest rate from 5% to 5.25% as part of its ongoing efforts to combat inflation. However, the Fed has indicated a possible pause in rate increases to evaluate the impact of monetary tightening on the US economy. Reserve Chair Jerome Powell, signaled the U.S. central bank was ready to resume its rate-hike campaign.

Global Economic Outlook

The global economy continues to face significant challenges, including weak growth prospects, elevated inflation, and increased uncertainties. Factors such as the legacy effects of the COVID-19 pandemic, the protracted war in Ukraine, the impacts of climate change, and shifting macroeconomic conditions are weighing on the global outlook. Aggressive interest rate hikes, prompted by stubbornly high inflation in both developed and developing countries, have tightened financial conditions and amplified debt vulnerabilities.


The economic recovery in China following its lock down is questionable, as companies may have already made alternative manufacturing plans excluding China. The expected post-lock down recovery has not materialised, despite initial positive news in that regard.


The European economy has displayed resilience within a challenging global context. Lower energy prices, reduced supply constraints, and a robust labour market supported moderate growth in the first quarter of 2023, dispelling concerns of a recession. As a result, the growth outlook for the EU economy has been revised to 1.0% in 2023. Polls indicate we might expect the euro zone inflation rate to fall to 5.6% in June from 6.1% in May. Its quite sure that there shall be a ninth consecutive rise in euro zone rates in July.


Japan’s economy experienced a positive turnaround in the first quarter, surpassing expectations and showing signs of a sustained recovery. Despite global challenges, the country emerged from recession as a result of a post-COVID consumption rebound. Government data revealed that the world’s third-largest economy grew at an annualized rate of 1.6% between January and March, exceeding market predictions of a 0.7% increase. The yen’s slide has put authorities under pressure as market participants remain wary of a potential intervention.


By the end of September 2023, the Namibia 10 Years Government Bond Yield is expected to be 16.912%.