GLOBAL MARKETS
UK LEANING TOWARDS LEAVING THE EUROZONE
Risk-off trade once again dominated the week, largely as a result of fears over Brexit with the referendum date on Thursday 23 June looming closer and further polls indicating that the UK is leaning towards leaving the Eurozone.
However, following the murder of Labour lawmaker Jo Cox and the halting of some campaigns, it seems sentiment may have turned back to the ‘stay’ camp so whichever the outcome; it is likely to be close.
Monetary policy decisions in the US, Japan and the U.K over the week also added to the risk-off environment but all three central banks decided to keep interest rates unchanged, highlighting the impact from Brexit as a significant concern. In reaction, safe haven assets and developed market bond yields benefited with both the Japanese and German 10 year bonds now trading around zero at -0.14% and 0.05% respectively. The US 10 year is also sitting near record lows, at 1.6%.
As mentioned, in the US the Fed kept rates on hold, noting that the jobs market has slowed (apparent in the recent poor non-farm payroll number) and that inflation expectations have also come down. While the median Fed forecast still indicates there will be two rate hikes this year, the market is pricing in much less of a chance.
If Britain decides to leave the Eurozone, this should have downward pressure on both US and global growth, making the likelihood of further rate hikes even lower.
In their monetary policy statement, The Bank of Japan also cited lowered inflation expectations as a concern as well as uncertainty surrounding EM and commodity currencies. They however made it clear that further easing could occur in the future and believe the economy “is likely to be on a moderate expanding trend.”
The Bank of England cited the possibility of Brexit as the “largest immediate risk facing the UK financial markets, and possibly also global financial markets.” Seven out of the ten most recent polls have indicated the ‘leave’ camp is in the lead but news flow over the weekend indicates this sentiment may have changed.
With risk-off trade dominating, DM’s outperformed EM’s over the week, the MSCI World and MSCI EM indices down -1.8% and -2.1% respectively. This upcoming week, all attention will be on the UK referendum and volatility can be expected.
DOMESTIC MARKETS
RAND EXPECTED TO BE REACTIVE TO OUTCOME
In line with other EM and commodity based currencies, the Rand was once again on the back foot this past week as risk-off trade dominated. However, Friday saw a rebound in the currency as sentiment surrounding Brexit turned, with investors determining the likelihood of a leave probability lower than originally thought. After reaching a low of ZAR/USD15.32, the Rand closed the week 0.5% stronger at ZAR/USD 15.00.
The SARB released its Q1 2016 Quarterly Bulletin with the Q1 current account data coming in significantly worse than expectations. Consensus was for a narrowing of the deficit to -4.1% of GDP from -5.1% the previous quarter. In the event, the deficit instead came in at -5.0% of GDP. The underlying data indicated that the deterioration was largely due to invisibles account which offset a marginal improvement in the merchandise trade balance. The trade deficit narrowed from –R41bn in Q4 2015 to –R38bn in Q1 2016.
April retail sales were also released, coming in worse than expected. Consensus was for April retail sales to have moderated to 2.5% y/y from 2.8% in March. Instead, retail sales came in at 1.5% y/y. With inflationary pressures from a weaker Rand, higher interest rates and slow GDP growth, the consumer is likely to remain under pressure for some time.
Most local indices closed the week negative, with resources and listed property being the worst hit, the JSE Resource 20 and JSE Listed Property indices both down -2.3%.
In line with global markets, which will be focused on the upcoming UK referendum, the Rand and local markets can be expected to be highly reactive to whatever the outcome may be.
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Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
