January was dominated by rising Covid-19 cases and vigorous debates on vaccine procurement and rollouts. Load-shedding resurfaced and the northern regions of the country had to contend with Cyclone Eloise, which brought some damage but also rain in certain draught-stricken areas. Revelations at the Zondo Commission delivered some damning accounts of wrongdoing at the State Security Agency (SSA), and the debate continues around when or whether former president Jacob Zuma will appear before the commission again. 

After tracking below the SA Reserve Bank’s target range of 3% to 6% in the midst of the pandemic, local inflation was recorded at an average inflation rate of 3,3% for the calendar year 2020. Although the domestic demand outlook is unlikely to be the cause of pricing pressures, other risks remain prominent and worth monitoring. Food inflation remains a pressure point, while base effects and higher fuel prices will be a driver for higher monthly figures over the year. Energy regulator Nersa announced further revenue recovery by Eskom, which will result in substantial increases in electricity tariffs for this year. Against this backdrop, the South African Reserve Bank kept interest rates on hold with a vote of 3:2. Inflation-linked bonds benefited from the prospects of reflation, returning 2,0% over the month. Local nominal bonds strengthened over the month, with the All Bond Index returning +0,8% in January.
 

Local markets had a good start to the year. The FTSE/JSE All Share gained 5,2%, benefiting from a strong performance from technology bellwether Naspers. Domestic counters also gained, with the Small Cap index returning a healthy 3,9% relative to headline numbers from the Mid Cap stocks (2,6%). A beneficiary of a rising oil price, Sasol delivered noteworthy performance (+23,2%), while resources also continued in strength (4,9%).

The property sector gave back some recent gains, declining by 3,2% in January, as lockdown measures brought forward concerns of decreased footfall. Redefine Properties announced that it would not pay a dividend for fiscal year (FY) 20, after considering the need to satisfy liquidity and solvency requirements.

As the year rolled into its second month, the first consignment of vaccines arrived in the country. With an aim to vaccinate at least 67% of the population or an average of 40 million people, the rollout will happen in three phases. May this mark the first milestone in the long journey to reclaim both lives and livelihoods.