Stanlib's Weekly Focus

Executive summary of Stanlib’s Weekly Focus

GENERAL MARKET COMMENT:

• Our view is that we have passed the “eye of the storm” of the sub-prime/credit crisis, although we’re still in the storm.  
• Stock markets seem to have started their year end rally and only have to advance by 3 to 4% to reach record highs, although the SA market has quite a big headwind in rising interest rates.
• Interest rates are declining in the US, UK and Canada, which is positive for stock markets.
• It makes sense to add to offshore equity holdings if one is underweight there.
• China’s contribution to world growth is now double that of the US, despite the fact that the US economy is still about ten times bigger than the economy of China.

SNIPPETS OF INFO:

· Conditions seem to be improving for Offshore Property Shares, with the help of lower interest rates.

• We think the STANLIB International Property Fund is a buy once again.

ECONOMICS

·The South African Reserve Bank opted to increase the Repo rate last Thursday 6 December by a further 50bps to 11.0%.

• Subsequently the prime interest rate was also hiked by 50bps to 14.5%, which is the highest level since August 2003.
• The hike was in-line with market expectations.
• We will be discussing the key points extracted from the MPC statement that accompanied the interest rate decision.

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