The market continued its downward spiral in February, contracting a further 9.9%. All the sectors did poorly for the month but Financials continued to be the worst hit, down another 12.2%. Industrials and Resources lost 11% and 8.8% respectively. The latter dragged down by the mighty Anglo American PLC that fell a staggering 24% during the month after reporting a 29% drop in 2008 profits. Furthermore this mining giant announced that it was suspending its dividend payment as well as cutting 19000 jobs this year. The interest rate sensitive bond and property sectors also fell 2.9% and 2.8% for the month respectively despite the Monetary Policy Committee shaving off one percent from the repurchase rate. Bonds ran considerably in 2008 and are now losing steam due to Rand weakness and the recently announced national budget deficit that will require an additional R62 billion of government bond issuance over the next two fiscal years. The January trade deficit of R17.4 billion also took the market by surprise, putting further pressure on the Rand.

The long awaited 2008 fourth quarter gross domestic product (GDP) announcement confirmed that the domestic economy is contracting. The data revealed that the manufacturing sector that makes up 16% of GDP fell by a significant 21.8% bringing overall
growth down by 1.8%. This data buoyed hopes of an emergency interest rate cut but this was later dashed by sticky inflation numbers. The latest inflation (CPI) number now includes Statistics South Africa's new methodology for gathering prices as well as the new category weights. Economists had expected inflation to fall dramatically but were disappointed by CPI coming in at 8.1% due mainly to stubbornly high food prices. The PPI numbers also revealed that agricultural food prices had shot up although overall PPI fell due to plummeting commodity prices.

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