By browsing our website, you accept the use of cookies. Our use of cookies is explained in our privacy policy.
Click the PRODUCTS & SERVICES button on the left to expand it again.
Ok. Got itWe are in the early stages of this unprecedented time, but there is no doubt that the economic cost of the pandemic will be great. Read our latest market review.
South Africa’s first case of Covid-19 infection was confirmed in early March. As more cases transpired and started to include local infections, President Ramaphosa acted with comprehensive and decisive measures, calling for a unified response to protect the country, its people and healthcare system. On Thursday, 26 March, the country entered a 21-day lockdown with only essential services allowed – a bold but necessary move.
We are in the early stages of this unprecedented time, but there is no doubt that the economic cost of the pandemic will be great. The government has provided relief through several fiscal measures, targeted at those that would be most affected, such as small businesses and more vulnerable communities. Banks are also providing relief, while private sector pledges will help at the margin. Government finances are however constrained and, therefore, less stimulus will be available than what has been offered elsewhere in the world.
The SA Reserve Bank responded to a benign inflationary environment and recessionary backdrop with a 100 bps interest rate cut, the largest move we have seen in some time. Although this preceded the lock down announcement, more may be on the cards as the impact on the economy unfolds.
In an unfortunate, but not unexpected move, credit ratings agency Moody’s downgraded the country to subinvestment grade. With a lot of bad news priced in, the market moved little on the announcement, overshadowed by the global crises and the news that the WGBI rebalance would be delayed to the end of April. The All Bond Index suffered a -9.7% decline over the month.
In tandem with global markets, the FTSE/JSE All Share traded down -12.1% in March. The pain was felt across the board, but possibly the most meaningful moves came from oil counter Sasol, which share price declined by circa 80%, as the market digested the possible repercussions of a low oil price on the highly indebted business. The property sector had another dismal month, losing –36.6% and bringing the performance over the last twelve months to -47.9%. Landlords currently face unprecedented pressures as tenants, including large retailers, seek rental holidays while in lockdown, and potentially beyond.
The market selloff was indiscriminate and severe, discounting the potential impact of a global and local lockdown, with only cash holding up. Risks remain high, but opportunities have not been this plentiful in some time. The markets look forward, and so should we.
Want to know more? Here’s what to do: