Weekly market Update & Podcasts – October

Returns

(to 23rd October 2020)

 

SA Equity (ALSI)

SA Bonds (ALBI)

SA Property (SAPY)

Global Markets (MSCI ACWI in ZAR)

1 week

0.5%

0.8%

5.2%

-2.0%

1 month

2.1%

1.7%

6.0%

0.5%

YTD

-0.6%

3.3%

-46.6%

21.1%

Latest material

·         Accountability needs to start at the top for Ramaphosa’s plan to succeed

https://ninetyone.com/en/south-africa/how-we-think/insights/accountability-needs-to-start-at-the-top-for-ramaphosas-plan-to-succeed

·         Ninety One Market Review – Quarter ending 30 September 2020

https://ninetyone.com/en/south-africa/how-we-think/insights/ninety-one-market-review-september-2020

·         Outlook still bright for gold and gold stocks

https://ninetyone.com/en/south-africa/how-we-think/insights/outlook-still-bright-for-gold-and-gold-stocks

Global market news
  • Discussions between Democrats and Republicans continues over CARES 2 (the second stimulus bill), but resolution may not appear by election day.
  • Coronavirus cases continue to rise globally, as a sharp fall in infections in India is outweighed by the resurgence in Europe and the US. Restrictions are being tightened in a number of geographies as a consequence, hindering the fragile economic recovery which has begun to evidence itself. But the negative impact of these should be partly blunted by governments’ heeding the IMF’s call for continued fiscal support.
  • Overall, Swiss watch exports are stabilizing and, given easier comparison basis in the coming months, one could see a scenario in which they should be flat by November. Apart from the very significant re-shoring of Chinese nationals’ spending to the Mainland (partly driven by the success of watch sales in Hainan), the other noticeable factor this month is the relative outperformance of the mid-price segment (wholesale value CHF 500 to 3000 & which generally underperforms the high end segment).
  • BMW has announced free cash flow ahead of consensus estimates, commenting that this was due to
    • a faster recovery in major markets
    • optimisation of working capital
    • a further reduction in fixed costs and capital expenditure.
  • San Francisco vacant office space went from the lowest supply ever to the highest by 2X in just a year
South Africa
  • The rand remained strong through the week, moving down to R16.15/$ at one point
  • Growthpoint reports that visits to the V&A Waterfront in Cape Town have rebounded strongly in recent months, with over 90 000 visitors to the precinct in the second weekend of October, which is more than double the roughly 40 000 level reached in June as the country entered Level 3. Growthpoint says that while corporate tenants are “honouring rental obligations”, “commercial office occupancy remains low with remote working firmly in place”. It adds that there are “indications” its office tenants intend to bring back staff, albeit on a reduced number of days per week.
  • Pick n Pay provided positive guidance and comments to the market on the back of strong cashflow generation
Covid-19 update
  • 43 million – number of cumulative COVID-19 cases to date; 1.15 million deaths
  • 716k cases in SA with almost 19k deaths
  • The World Health Organisation’s Solidarity Trial has found four medicines used to treat Covid-19 – remdesivir, hydroxychloroquine, lopinavir/ritonavir and interferon – offered little to no benefit for Covid-19 patients. The trial is one of the largest trials for Covid-19 treatments and has enrolled 12,000 patients in 500 hospitals in over 30 countries. The organisation said it will continue to evaluate other treatments.
  • On Sunday, the White House claimed that the US cannot control the fast-worsening pandemic
  • KZN premier, Sihle Zikalala threatens a 2nd hard lockdown if people continue to flout social distancing regulations
Numbers from the week
  • R49.5bn – how much SA’s Unemployment Insurance Fund (UIF) paid out in special Covid-19 jobless claims between March and October, as announced by the labour minister said on Tuesday
  • R10.5bn – how much of the government’s coronavirus spending is being investigated for corruption, more than double the amount that was being investigated two months ago
Quote of the week “Democracy has to be born anew every generation, and education is its midwife.”

John Dewey

Charts of the week

Overall SA retail sales volumes have shown strong recovery

 
 

Leave a Reply