Day 284 of Lockdown | Market Update

Our weekly series of lockdown-inspired market commentaries returns.

Paul Marais

Paul Marais

Managing Director and Portfolio Manager

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Day 284 of Lockdown | Market Update

After President Cyril Ramaphosa’s latest ‘Family Meeting’, we return today to our series of lockdown-inspired weekly blogs. As the next Meeting is currently scheduled for the 15th of January, we will likely write to you next Monday as well as the following Monday; at which point we will reassess the need for a publication of this type.

Despite last week’s Covid-19 lockdown announcement and typically thinner year-end liquidity, markets have generally been stable throughout the year-end period. The JSE All Share Index has hovered around 60,000 points, the rand has traded at roughly 14.50 to 14.65 to the US dollar and the yield on the South African 10-year nominal government bond has drifted about 10 basis points lower to about 8.7%. This latter item is perhaps indicative of expectations that the South African Reserve Bank is more likely to cut interest rates in the current lockdown environment to support the economy that they were when South Africa was at alert level 1. There is some road to travel though as, in line with expectations, the number of confirmed positives and active cases in South Africa has spiked meaningfully over the last two weeks and there is very likely more grim data to come as the coronavirus effect of festive season social gatherings has yet to fully play out.

This comes at a time when the UK has finally concluded a trade agreement with the EU and exited the trading bloc on the 31st of December, the US agreed a second round of stimulus (despite the $2,000 spanner thrown into the works by President Donald Trump) and as run-off elections occur in Georgia. Tesla has now been included in the S&P 500 and Bitcoin has surged to more than $31,000. Three primary Western-world vaccines are in various stages of roll-out which, for a more balanced view of the world, need to be seen alongside those being developed and/or rolled out in China and Russia primarily regardless of the rather obvious questions about their legitimacy. Expect to hear much more about delays in approvals, efficacy of execution and reinfection of previously vaccinated people. Some of which will be alarmist, and some of which will be real enough and meaningful enough to spook markets.

For the foreseeable future however the combined effect of central bank traditional (ultra low for longer interest rates) and non-traditional (mega bond buying programs) monetary policies, the removal of election uncertainty (US presidential and Brexit primarily) and vaccines is very likely to continue to support risk-taking behaviour. Be aware of the difference though between risk-taking behaviour and risky behaviour; only one of which is likely to be rewarded.

The last edition of the weekly Chart Book can be found here.

Stay safe. Stay positive. Wear a mask.

Market Data   

Asset Class Last Week Last Month Last Year Last 3 Years
Local Cash 0,07% 0,30% 5,39% 6,64%
Local Bonds -0,03%  2,65% 8,91% 8,84% 
Local Property -0,81% 13,71% -34,49% 20,66% 
Local Equities 0,40%  3,48% 7,00% 3,12%
Global Property 1,53%
2,79% -8,66%  2,32% 
Global Equity 1,43%  3,56%  16,83% 10,63%
USDZAR 0,49%  -3,64%  5,04% 5,86%

Helpful Resources

  • World Health Organisation (WHO) | Coronavirus disease (COVID-19) Pandemic
  • Dept: Health | COVID-19 Online Resource & News Portal |

  • Please take the following into account:

    • Wherever possible, total return indices have been used. These include the effects of dividends, interest and coupon payments in addition to price movements. Please take data presented as, generally, inclusive of price and income effects.
    • Performance and other market data excludes the effect of income, capital gains and dividend withholding taxes as well as excluding advice, administration and asset management costs. Please take data presented as exclusive of tax and cost effects.
    • Data is based on the previous Friday’s closing prices but as the situation is fluid the market commentary may or may not extend beyond Friday’s close. Other data, links, estimates, etc referred to are correct as at the time of writing.
    • Collective investment schemes and other similar products performance information is based on data provided by Morningstar, which is signed off the first week of each month. In general, we will refrain from covering this until sign-off is obtained.
    • NFB Asset Management publishes a monthly newsletter called The Rationalist. For as long as these weekly emails are being sent we have elected not to publish The Rationalist. Expect the monthly NFB AM schedule to resume once the lockdown is lifted.
    • The previously used Refinitiv data code for Local Bonds (SAFRALL) has been discontinued, therefore a new code (ASAGVAL) has been used for calculations moving forward which is subject to revision in the future.

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