Market Monitor
February 2004
Global Equity markets continue to gain ground. The Dow was last up at 10664. It now very close to its all time high of 11,723, which was set 4 years ago in January 2000. Global MSCI world equity index is close to a 3 year high.
The S&P500 is at 1147, still around 25% off its all time high of 1552 set in March 2000. This broader US market index still trades at about 30 times earnings, which is not cheap.
The US markets, having now rallied up firmly, are all at important technical levels. They can either break through these levels and continue upwards, but at the same time, having rallied up so strongly for the last 12 months, they could start losing steam.
Locally the weakening dollar has been the major factor in boosting the rand. Having lost some ground, the rand moved all the way back to R6,50/US dollar. The firm rand has put pressure on exporters, especially the large resource companies.
Investors however seem to be looking past the current strength, to a weaker rand and this combined with the strong commodity prices in general has helped push resource shares up substantially over the last few months.
Small and mid cap shares have run up firmly over the last few years, re-rating from low prices. They are not as cheap as they were a year or two ago, but generally there still appears to be continued value in many shares outside the Top 40, and importantly, unlike many of the top 40 shares are not dependent on a weaker rand.
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Sincerely
Ian de Lange CA (SA)
20 February 2004
082 921 0220
Posted: 2004/02/20 18:28 View Archive