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HOW THE DIFFERENT ASSET CLASSES PERFORMED - Webfactory

HOW THE DIFFERENT ASSET CLASSES PERFORMED - Webfactory

Q4 2009Market and

Q4 2009Market and economic updateLocally speakingBackground• Domestically, the recovery in economic growth in the third quarter was less pronounced despite the weak first six months of the year and reasonable growth inthe global economy. Private sector investment continues to contract while household expenditure remains under pressure from reduced credit extension andrising joblessness. Spending on large ticket items, in particular, remains under siege as households rebuild personal balance sheet and banks remain cautiouson lending.• For now, government remains the engine of growth as spending on large scale infrastructure projects across the country continues at a robust pace. Aftermassive declines in the first six months of the year, the manufacturing sector has responded to some stabilisation in overall demand and very low inventorylevels. The sector grew by 7.6% in the third quarter of 2009, its first positive contribution to overall growth since the second quarter of 2008.• Improved growth prospects and higher risk appetite drover domestic equities higher. The All Share Index ended December on the years high, returning 2.9%over the month and 11.4% over the quarter. Strong foreign investor interest to the tune of over R75bn in net equity inflows boosted the market’s rating andpushed the year’s returns to 32%, erasing all of 2008’s losses.• The All Bond Index lost 1% over the year, but marginally outperformed cash over the second half, gaining 4.1% versus a cash benchmark return of 3.7%. Thefourth quarter also saw the appointment of new reserve bank governor, Gill Marcus, preside over her first MPC meeting.• The listed property sector showed some resilience in a very difficult trading environment, gaining 4% in the last quarter to finish the year 14% higher. The sectorhas maintained positive income growth despite rising vacancies, downward pressure on market rentals and upward pressure on operating expenses fromabove inflation electricity, municipal rates and wage costs.Outlook• The 2010 Soccer World Cup may well stimulate increased consumer confidence for a few months, and indeed is likely to coincide with the eventual recovery ofSA consumer spending. We anticipate SA economic growth to be between 2.5% and 3.5% in 2010, driven largely by a recovery in inventories.• The SA equity market will take its lead from global emerging markets, and hence we expect SA equity returns to be modest in 2010. From a sectoralperspective, we favour bank shares as aside from receding bad debts, the upturn currently underway in residential property. Property is the ultimate collateralfor much of bank balance sheets and the resumption of activity in this area will allow the resumption of lending activity, lower arrears and higher fees. Inaddition banks used the credit crisis to widen their margins.• We consider that bond returns around the world are going to be very differentiated, and that in those countries like South Africa where government debt levelsare moderate and where inflation is set to fall, that bond returns will beat cash returns.• SA inflation is set to fall (after a few months of increase for base reasons) largely in delayed response from the rand strengthening from the R10 level to R7.50.We do not expect any further interest rate cuts, but that the SA prime rate will be on hold for most of 2010.• The rand is expected to continue to be range bound for the first half of 2010, but could well come under greater pressure as the year progresses.Economic comment supplied by Investec Asset Management SATop performing manager Q4, 20098

Performance tableIndex/Sector1Month3MonthYTD1Year3YearAll Share 2.92% 11.44% 32.13% 32.13% 6.53%Capped All Share Index 2.93% 11.31% 32.29% 32.29% 7.24%Shareholder Weighted All Share Index 3.86% 8.96% 29.91% 29.91% 6.31%Top 40 2.68% 12.50% 31.73% 31.73% 6.20%Mid Cap 4.29% 5.57% 35.72% 35.72% 9.08%Small Cap 4.98% 6.58% 28.28% 28.28% 5.75%Resources 2.52% 16.68% 35.47% 35.47% 7.78%Mining 2.54% 17.98% 39.87% 39.87% 7.74%Gold Mining -6.83% -1.20% 7.81% 7.81% -5.55%Platinum & Precious Metals 12.54% 17.67% 55.70% 55.70% 5.03%General Mining 2.75% 23.12% 46.31% 46.31% 11.05%Oil & Gas 2.48% 7.76% 9.63% 9.63% 8.42%All Share Industrials 3.36% 8.46% 30.51% 30.51% 8.86%Basic Materials 2.58% 17.04% 38.17% 38.17% 6.95%Chemicals 0.49% 3.47% 16.01% 16.01% -2.28%Construction & Materials 4.49% -8.20% 13.96% 13.96% 5.36%Forestry & Paper 4.01% 14.76% -7.40% -7.40% -21.28%Industrial Metals -0.51% -12.62% 18.91% 18.91% 8.53%Industrials 4.16% 0.38% 21.65% 21.65% 2.02%General Industrials 0.42% -3.00% 17.90% 17.90% 8.73%Electronic & Electrical Equipment 5.71% 2.54% 22.67% 22.67% -6.48%Industrial Engineering -2.32% 6.61% 0.98% 0.98% -7.82%Consumer Goods 2.69% 18.72% 37.43% 37.43% 14.00%Automobiles & Parts -5.36% 1.92% -8.62% -8.62% -23.63%Health Care 9.72% 21.17% 76.77% 76.77% 12.53%Beverages 0.07% 20.59% 36.58% 36.58% 13.34%Food Producers 5.99% 7.97% 24.33% 24.33% 11.94%Health Care Equipment & Services 13.31% 27.91% 56.97% 56.97% 3.67%Pharmaceuticals & Biotechnology 7.47% 16.92% 93.61% 93.61% 27.47%Consumer Services 6.80% 9.84% 44.95% 44.95% 11.36%General Retailers 6.58% 3.29% 31.42% 31.42% 0.45%Travel & Leisure 3.44% 7.45% 11.54% 11.54% 0.16%Media 7.94% 16.56% 75.88% 75.88% 20.31%Support Services 7.07% 10.53% 28.74% 28.74% 1.56%Industrial Transportation 6.82% 13.01% 43.17% 43.17% -9.26%Telecommunication -0.83% -3.25% 10.02% 10.02% 10.26%Food & Drug Retailers 5.91% 8.11% 30.12% 30.12% 31.20%Fixed Line Telecommunications 0.35% -13.35% -1.34% -1.34% -3.80%Technology -0.96% 14.88% 53.63% 53.63% 7.03%Software & Computer Services -0.96% 14.88% 53.63% 53.63% 7.03%

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