Sarb slashes interest rates by a larger-than-expected 100 basis points to shield economy against COVID-19 fallout

Highlights _________________________________________________________________________________ • The South African Reserve Bank (Sarb) Monetary Policy Committee (MPC) slashed interest rates by a larger-than-expected 100 basis points to 5.25% at the March 2020 interest rate-setting meeting. • The Sarb acknowledged significant downgrades to expected global economic activity due to the outbreak and spread of COVID-19. • Significant downside adjustments to the Sarb’s economic growth outlook (1% weaker for 2020 and 0.6% lower for 2021 relative…

Outlook amidst the chaos: The current situation

Nazmeera Moola Head of SA Investments (Ninety One) After several weeks of complacency, financial markets tipped into full-blown panic on 24 February as Covid-19 continued to spread. As a result of the virus, markets are scrambling to price in the impact on the global economy of both a supply shock and demand shock. The supply shock is driven by the closure of a large portion of Chinese manufacturing capacity for…

The potential loss of gains by ‘guessing’

This paper focuses on the effect on returns caused by trying to time markets. The theory behind this is that we tend to ‘think’ we have the skill to time markets, although the decision is often driven by fear or greed to be invested or not. Research suggests that we do not have this skill of foresight, and nobody, not even Mr Warren Buffet, could convincingly attest to this. The…

2020 outlook: late-cycle relief

Key Takeaways Macro: We expect a late-cycle relief rally in 2020 as industrial production rebounds and recession risks recede. Fixed income: With global growth likely to revive and central banks on course to keep short-term interest rates low, yield curves should steepen. Currencies: The US dollar may correct from the position of strength it has sustained for several years, relieving pressure on emerging market currencies Emerging markets: Despite the headline noise, most emerging markets…