Returns

(to 9thOctober 2020)

 

SA Equity (ALSI)

SA Bonds (ALBI)

SA Property (SAPY)

Global Markets (MSCI ACWI in ZAR)

1 week

1.8%

-0.1%

-2.0%

3.5%

1 month

0.2%

-0.8%

-5.0%

1.4%

YTD

-0.9%

1.5%

-48.2%

23.3%

Latest material

Webinars and Podcasts

Articles

·         Paul Hutchinson: South Africa, approaching an income desert?

·         Marc Lindley & Paul Hutchinson: There is always as alternative

·         Nazmeera Moola & Duane Cable: It’s time for SA to play offence – and to take courageous economic decisions

Global market news

  • Global markets had their best week in three months, up 3.7% in USD.
    • The risk-on mood last week following the White House’s fresh push to advance fiscal stimulus talks.
    • S&P moving with fiscal headlines.
  • The Trump Covid debacle continued last week. At least 34 people in the White House have tested positive, a prime example of how the infection spreads in close contact.
  • On the US Presidential election, polls indicating that Joe Biden is roughly 15 points ahead (but polls vary).
    • Markets seem to be getting their heads around a clean sweep by the Democrats. Think stimulus and corporate taxes.
    • Still uncertainty around whether Trump would accept the result.
  • Critical week for Brexit negotiations. Boris Johnson’s self-imposed deadline looming on Thursday.
  • China back from Golden Week holidays – their catch-up boosted stocks, with stronger data out. Private survey of PMI data showed a number 54.8, signifying expansion.
    • Fresh policy measures deployed over the weekend to curb the yuan appreciation.
  • Oil had its biggest weekly gain since June, with Hurricane Delta shutting 90% of oil in gulf.
  • US bonds up 10bps to 0.77% in risk-on environment. Questions as to whether this signals a shift in the equity style trend (value now in favour over growth?).

South Africa

  • All eyes moving to what happens in the October MTBS set for 21 October. Will we get a June re-run, full of assumptions lacking detail and numbers? Will there be more kicking the can down the road?
    • Questions remain on the credibility and delivery gap.
  • The Rand: Turkey, Brazil and Russia are behaving like naughty children, which has helped us. Our currency has outperformed relative to other EM countries YtD.
    • SA relative to other EM: on a volatility adjusted basis, we look attractive.
  • Equities: Given uncertainty building in the markets, the next month will likely be volatile. Beyond that, we need positive data surprises to support markets, with risks of further waves to offset that.
  • Inflation and bonds: Reserve Bank Governor Lesetja Kganyago suggested we’ve seen the inflation number bottom and therefore the last rate cut.
    • Initial reports that actual food price inflation way above the official CPI number. (Clothing only marginally positive)
  • Credit: Borrowing costs remain very low. There is a wash of money in income funds that needs to find a home. Weak corporates are battling to raise cash (eg: smaller property companies).

Covid-19 update

  • The CDC revised its guidance, to acknowledge the virus spreads through airborne transmission (particularly in poorly ventilated spaces).
  • Covid infections in Europe ramping up, deaths not following just yet. Are lockdowns set to resume?
    • Is the snapback in recovery over? Questions around how this will impact manufacturing and service industries as recovery is not typically in line and plays out differently.
  • Vaccine news remains disappointing – unlikely to see anything positive by end of year.
  • The EU is set to order up to 500,000 treatments of Remdesivir for treating severe cases.
  • Back home, there appears to be a definite uptick in new infections as social gatherings open. Feels like we have seen this movie before from our global peers.

Numbers from the week

  • The US Presidential election is just 22 days away! Will we have a clear-cut answer on what that means for the market immediately after a result?
  • $400bn – the difference between what the Republicans are willing to offer and the Democrats want in terms of a fiscal package ($1.8 versus $2.2bn).
  • 91. Not just our new name. Lewis Hamilton has now equalled Michael Schumacher’s record of 91 wins at the Eifel Grand Prix.