TVC Economic Review: Q4 2021

In this economic review, we focus on events that moved the market in Q4 2021. Globally we saw continued economic growth, despite setbacks such as Omicron, and on the local front, Gross Domestic Product (GDP) continued to be a concern as the impact of July unrest was felt, even as local equities outperformed other developing and emerging markets. 

Global Markets

One of the biggest global influences in quarter four was the surge of COVID-19 Omicron infections, which meant the re-imposition of lockdown restrictions and travel bans – but thankfully the impact of this was short-lived (due to the reduced severity of the variant) and only had a fleeting impact on markets, and meant that global economic growth was exceptionally strong.

Riskier assets performed well, boosted by global monetary policy remaining loose, and global equity markets continued their advance as investors focused on economic resilience and corporate earnings, producing strong returns.

In this quarter the MSCI World Index – a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets – was at around 7.8%. However emerging markets lost value in Q4 and underperformed in comparison, at their cheapest on a relative basis since 2003.

Global bonds came under some selling pressure in the fourth quarter of the year due to the US’ asset tapering programme, and, on the other hand, listed property surged on the removal of lockdown restrictions.

Local Markets

The impact of the July unrest impacted South Africa’s Q4 GDP figures, as did the unstable electricity supply – and the biggest challenge facing the country was its persistently low growth rate (the Treasury expects GDP growth to average around 1.8% over the next three years, whereas the International Monetary Fund expects growth of only 1.4%). In response to this, the IMF warns SA government to fix its public finances and put a lid on public debt, as well as raise efficiencies in the economy.

Local equities outperformed their developed and emerging market counterparts in the fourth quarter, yielding 15.1% in rands and 8.5% in US dollars – delivering its strongest calendar year return since 2012. However, the South African Rand depreciation hurt local bonds performance and they underperformed in comparison, yielding some 2.9% in rands but -3.0% in US dollars.

Due to the lifting of COVID-19 lockdown restrictions for the country (despite Omicron) and lower bond yields, in December the local listed property sector saw a surge, shrugging off the aggressive interest rate hikes. The year also ended with the SA stocks at a record high, as the Johannesburg Stock Exchange (JSE) broke through the 71 000 level for the first time.


The market view is that global growth will slow in 2022 but that will still exceed trend growth. The global economy should adjust better to the COVID-19 pandemic as it becomes endemic, while the transition to a greener economy could lead to meaningful fiscal spending and an increase in investment. However, the impact of Russia’s invasion of the Ukraine is likely to be the most significant factor to impact the first quarter of 2022.

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