Both Global and local equity markets performed strongly in the second half of 2009

If 2008 was all about ‘sub-prime’ and ‘bailouts’, 2009 was about ‘green shoots and ‘U’ or ‘W” shaped recoveries. The 2009 year began with investors attempting to recover from the economic hangover brought about by the sub-prime financial crisis, deteriorating economic fundamentals and a global recessionary outlook. Governments began the year tackling the problem by introducing interventionist strategies including large government funded bail out plans and coordinated interest rate cuts to stave off further financial crises. The financial markets began to respond positively as financial market participants began to feel more confident that these adopted measures would foster a global recovery.

Both Global and local equity markets performed strongly in the second half of 2009. Economic growth indicators have begun to improve with the rates of decline slowing and in some case even growing. Market interest (which before focused on the extent of government economic intervention) is now focused on the ‘when and how’ of the withdrawal of government economic support.

In real estate terms, global property (excluding SA) recorded a total return of 37.5% (in USD). What is interesting is the variation of returns. Singapore recorded a total return of 88.99% whereas Japan recorded a total return of -6.71% (a spread of 95.70%), research into various markets indicate that global fundamentals may be starting to improve with vacancy levels peaking and rental levels bottoming.

SA listed property recorded a total return of 46.8% in US dollars in 2009 (14.1% in Rands). Fundamentals have weakened during the year and income distribution growth is expected to slow, but remain positive, in 2010.