South African equities extended their remarkable run in February, delivering another strong month of gains and marking a twelfth consecutive monthly advance. The FTSE/JSE All Share Index rose +7.0% MoM, outperforming bonds and most global peers as commodity-linked shares once again drove performance. The FTSE/JSE All Bond Index gained a more modest +1.7% MoM, while SA-listed property delivered a robust +6.3% MoM return. Sector leadership shifted during the month, with financial stocks emerging as a key contributor alongside resources. The FTSE/JSE Financial 15 Index advanced +7.4% MoM, supported by strong gains in banks and insurers, while the FTSE/JSE Africa Resource 10 Index surged +13.4% MoM amid renewed strength in precious metal prices. By contrast, industrial stocks remained broadly flat as weakness in large technology and investment holdings weighed on the sector. In US dollar terms, the MSCI South Africa Index rose +10.4% MoM, comfortably outperforming both MSCI World (+0.6% MoM) and MSCI Emerging Markets (+5.4% MoM).
South Africa’s macroeconomic backdrop remained broadly supportive in February. Headline inflation eased slightly to 3.5% YoY in January, down from 3.6% in December, while core inflation remained contained at 3.4%, close to the SARB’s 3% target. The 2026 National Budget was generally well received by markets and the taxpayers, reinforcing the country’s fiscal consolidation path while avoiding major tax increases. Strong commodity prices and improved revenue collection helped support the fiscal framework, allowing the National Treasury to project a narrowing budget deficit and debt stabilisation in the coming years. Bond market sentiment remained constructive, with the 10-year government yield hovering around 8%, near its lowest levels in almost a decade. The rand also strengthened modestly, appreciating +1.3% MoM against the US dollar, supported by commodity strength and improved investor sentiment toward South African assets.
Global equity markets delivered a mixed but resilient performance in February as investors navigated a complex backdrop of geopolitical tensions, AI-related market volatility and evolving policy developments. The MSCI World Index rose +0.6% MoM, extending its run of monthly gains despite weakness in US equities. Market leadership continued to broaden beyond US mega-cap technology names, with value-oriented sectors outperforming growth stocks. Commodities again played an important role in shaping global asset returns. Precious metals continued their strong rally, with gold rising +7.9% MoM while platinum and rhodium advanced +7.9% and +7.2% respectively over the month. Oil prices also firmed modestly (+2.5% MoM) as geopolitical tensions surrounding the US and Iran heightened concerns about potential disruptions to global energy supply.
US equities underperformed most major markets during February as investors continued to rotate away from large-cap technology stocks. The S&P 500 declined -0.9% MoM, while the Nasdaq fell -2.3% MoM as weakness in technology and software companies weighed on the broader index. By contrast, the Dow Jones managed a modest gain of +0.2% MoM, reflecting stronger performance in more traditional value-oriented sectors. A central theme during the month was growing scrutiny around the scale and sustainability of artificial intelligence investment. Major US technology firms outlined plans to significantly increase AI-related capital expenditure, with projected spending expected to exceed US$650bn in 2026. While demand for AI infrastructure remains strong, investor sentiment has shifted toward evaluating the long-term return on these investments. US economic data were mixed, with inflation moderating slightly but growth momentum slowing. The Federal Reserve’s preferred inflation gauge, core PCE, edged higher to 3.0% YoY, while US GDP growth slowed to an annualised 1.4% in the fourth quarter of 2025. Against this backdrop, US Treasury yields declined during the month, with the 10-year yield falling below 4.0%, while the US Dollar Index strengthened 0.6% MoM.
European equity markets continued to perform strongly, with the MSCI Europe ex-UK index up +3.5% MoM as it benefitted from improving economic data and investor flows seeking diversification away from the US technology sector. France’s CAC 40 advanced +5.6% MoM, while Germany’s DAX climbed +3.0% MoM. UK equities also delivered a robust performance, with the FTSE 100 rising +6.7% MoM and reaching record highs during the month. Inflation in the UK moderated to 3.0% YoY in January, down from 3.4% previously, reinforcing expectations that monetary policy may become more accommodative over time. However, economic growth remained modest, with the UK economy expanding only +0.1% in the fourth quarter of 2025.
Emerging market equities extended their strong start to the year, outperforming developed markets once again in February. The MSCI Emerging Markets Index rose +5.4% MoM, supported by strength in commodity-producing countries and continued rotation away from US technology stocks. Despite this broader strength, performance in China remained mixed. The Shanghai Composite Index gained +1.1% MoM, while Hong Kong’s Hang Seng Index declined -2.8% MoM as Chinese technology companies experienced their weakest monthly performance in over two years. Shares of several large Chinese internet platforms fell sharply amid intensifying competition and concerns around profitability, weighing on the broader technology sector. Nonetheless, the overall EM complex continued to benefit from improving global growth expectations and rising commodity prices.
The hedge fund ended the month in positive territory, as gains from the long book covered detractors from the short book. Performance on the long side was driven primarily by strong contributions from Barrick Mining, Impala Platinum, and MTN Group, while Tencent and Naspers were the largest detractors during the month. Within the short book, modest gains were generated from US index protection and positions in the technology sector. However, these were overshadowed by losses from short positions in gold mining stocks, followed by diversified mining stocks.