An indicator using almost 50 discrete economic data points that have together reliably foreshadowed business cycle recessions since 1960, remains mired in the mud and in the 2nd recession since the global financial crisis of 2008, according to the latest data as at March 2019:
Our economic misfortunes really started in earnest from 1Q2015 where we underperformed our emerging market peers and developed economies. Since then Emerging Markets (EM) grew their economies 10.32%, BRICS 11%, OECD 8.3% and G7 by 7% while SA could only muster 3% growth (0.74% per annum).
In fact in the last 4 quarters from 1Q2018 to 4Q2018, South Africa was the 4th slowest growing economy on the planet, only managing to beat the Argentina and Turkey economic melt-downs.
With poor 1Q2019 GDP figures expected from Stats SA on 6 June from the effects of load-shedding, (our model says -0.1% quarter-on-quarter growth), the comparative performance to the rest of the world is not likely to improve.
That does not mean that an opportunity is not available on the local stock market. With the JSE down some 9% from its 23 April peak, there will be many traditionally solid counters going cheap as they were guilty of being too exposed to the local economy. The chart below shows a sample from our TOP40 Index constituents page:
Dwaine van Vuuren
RecessionAlert, Sharenet Analytics
Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and Sharenet Analytics (SA based) into subscription services used by thousands of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.