Year in Cartoons | 2018

9 January 2019 | SA Views | Ian Stiglingh
 


Bitcoin Bubble

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2018 will be best known for a crash in the value of Bitcoin. The price of Bitcoin peaked at $19 539 on December 16, 2017. From that point onward it was downhill, with the price losing value over the year to end 2018 at $3 823 (-80% from its peak).

Zuma Era Ends

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Following Ramaphosa’ s victory in the race to become the new leader of the ANC, it was only a matter of time before he ousted Zuma from his post as president. Ramaphosa then took up the mantle after serving as vice president, and he is likely to be the president for the foreseeable future with the ANC unlikely to lose its majority in the 2019 elections.

Bears Waiting in the Wings

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The US equity market entered 2018 on track to be one of the longest bull markets in history. Tax cuts for US corporates further fuelled earnings and many investors were starting to wonder when this wonderful bull market will end. We were witnessing “synchronised global growth” but surely the market can’t run further?

US Running Out of People to Employ

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US jobs numbers somehow kept getting better, even during times that the stock market did not agree with strong economic numbers. Unemployment has been at the lowest in decades and also played a key role in the Fed’s decision to maintain its rate hike cycle.

Apple Wins Trillion Dollar Race

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Apple became the first company to hit the $1 trillion milestone, but the company may have jumped too high. After passing the milestone in early August, the company’s share price lost over 25%.

Land Expropriation

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© 2018 - 2019 Zapiro (All Rights Reserved)

Land expropriation without compensation was one of the big political stories in South Africa during 2018. The ANC plans to change the constitution and many South Africans are concerned that it may be a tool to redistribute land by taking from the white minority.

South Africa Enters Recession

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© 2018 - 2019 Zapiro (All Rights Reserved)

Years of mismanagement in government spending and corruption with the Guptas and state capture, has filtered through to the economy. Despite new hope from a Ramaphosa presidency, South Africa still fell into a recession, highlighting the dire situation in the country that has one of the highest unemployment rates in the world.

Emerging Markets Take Pain

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South Africa wasn’t the only emerging market country finding it difficult to spark growth. Turkey and Argentina saw substantial depreciation in their respective currencies, the latter even pushing interest rates to 60% in an attempt to keep money from leaving its shores. The Turkish Lira lost 43% versus the USD over the year while the Argentina Peso depreciated 97%.

Trade War

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The trade war between the US and China has seen the introduction of trade tariffs, which are showing signs of a negative impact on the Chinese manufacturing industry. The trade war is rightly one of the biggest concerns for investors and a slowdown in economic activity in China is evident.

The Bear is Quick to Pounce

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The bear market caught many by surprise and volatility spiked. Intraday market movements of more than 4% in global and South African equities were not a rare sight anymore and mixed signals of strong US earnings, but risks of slowdown and a market correction has pegged bulls against bears. A battle the bears have won in the final quarter of 2018.

Can You Trust the Data?

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Data evaluated in the right way can give strong insight and help you make more accurate forecasts. However, if there is something you can learn from 2018, it is that the market sometimes blatantly ignores data. This may produce an opportunity in market mispricing, but momentum is a tough thing to stand against.

 

Ian

Ian Stiglingh
Quantitative Investment Analyst 

Ian Stiglingh is a full time quantitative analyst, responsible for research of equities across all industries. Ian completed his degree in Mathematical Science in 2013 and his Honours degree in Financial Risk Management in 2014, both at the University of Stellenbosch. During his studies, Ian worked as an intern at Old Mutual Actuaries & Consultants as well as J.P. Morgan in Johannesburg, and is currently a CFA candidate 


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