Another great year
For stock market optimists, last year was another triumph.
Their prediction at the beginning of last year of a 25 percent return on local equities proved too conservative - the market delivered yet another massive 40percent-plus return.
So what fuelled the great returns enjoyed by investors in South African equities last year?
The continuation of the Chinese and Indian scramble for resources in Africa was a prime reason, said Jeremy Gardiner, a director of Investec Asset Management. The resources sector climbed 44percent.
Financials and industrials, which Gardiner said were relatively underpriced, finally received the attention they deserve, returning 36percent and 42percent respectively.
The wave of private equity investors scouring our market, in line with global developments and because of some very attractive valuations, resulted in a substantial rerating of a number of our listed companies.
Though some local companies have since delisted, having been bought out by local and foreign investors, others have rallied strongly in anticipation of very attractive cash offers.
Another element boosting the market, Gardiner said, was positive global sentiment towards emerging markets despite a brief mid-year collapse in confidence.
So what are Gardiner's predictions for this year?
He said the country is either at an interest rate peak, or almost there.
Though another 50 basis points increase in the interest rate is possible it will become less and less likely if the oil price stays at its current levels.
Gardiner said a variety of factors have contributed to the weakness in the oil price.
They include less speculative activity, additional capacity and declining geo-political tensions.
"Once again, expect a gradually declining rand and, given the weaker oil price, you should see inflation peaking in the second quarter," claimed Gardiner.
Gardiner said the extent to which the US - and therefore the global economy - slows will dictate Chinese and Indian growth. Those growth rates will affect demand for our commodities, which in turn will affect our currency, our economic growth and the performance of the JSE.
So what should you be doing as an investor?
Remain diversified, Gardiner advised.
"Though equities aren't cheap, and a correction at any stage is possible, they are not in dangerous territory."