An investor recently said 'we need a lot of good news to make positive single digits, but just a bit of bad news to make negative double digits'. This quote seems particularly apt at the moment.
On 1 January 2020, the South African rand was trading at R14.01 to the US dollar, gold was priced at $1,520 an ounce and base metal prices had ticked up, suggesting that global manufacturing may be trending upwards.
This boded well for a poorly performing South African economy, which is heavily reliant on commodity cycles and a global manufacturing appetite for its raw materials.
In 2019, firmer metal prices created positive momentum on the JSE resources index, which delivered returns of 28% for the year. Investors were hoping this would continue and perhaps rub off on other sectors of the exchange where returns in 2019 were patchy.
Overall, the All Share Index returned 12.05% (thanks in part to resources and other Top40 stocks) in 2019, but a closer look shows this was not generalised across the board and in many sectors prices fell off dramatically as companies failed to deliver the promised returns.
Small-cap stocks, in particular, were punished, returning a negative 8% for...