The second quarter of 2020 ended with the S&P 500 continuing its recovery from the Covid crash in February/March, and is now roughly 3.4% down from the record highs experienced in mid-February, all at a time while global earnings remain suppressed due to global lockdown measures and limited trading capabilities. Fears of possible second waves of infections echo around the globe which will mean that uncertainty will remain in markets for the foreseeable future until an effective vaccine is approved for public use. There are currently 5 vaccines in large-scale efficacy trials that could potentially be approved in future. South Africa surpassed half a million cases of Covid-19 at the end of July while the fatality rate is hovering at a level of 1.5% which is amongst the lowest in the world. The Western Cape had 40% of the country’s total cases at the beginning of the month and 19% by the end of it as Gauteng, KZN and Eastern Cape showed a dramatic increase in new infections. South African government obtained a $ 4.3 billion loan from the IMF at a 1.1% interest rate to be paid in 5 years’ time. The funds will be used to support health and frontline services as well as drive job creation and stabilise public debt. On a positive note the average number of new Covid-19 cases seem to be on the decline.
The JSE All Share Index (up 2.6%) showed a slowdown in the continued positive performance since last month. Resource stocks (up 9.0%) were the best performing equity sector once again, followed by Financials (up 0.4%) with slightly positive performance. Industrials were the worst performing (down 1.3%) equity category. Small-cap shares (up 1.3%) slightly lagged Mid-cap shares (up 1.7%) and Large-cap (up 2.4%) but all still with positive returns. The MSCI World Index ended the month up 4.8% in US Dollar terms while Emerging Market equities outperformed their Developed Market peers and ended the month up 9.0%. The South African Listed Property sector (down 3.2%) and the SA REITs sector (down 3.9%) showed a contraction since June’s recovery. The Rand appreciated 2.0% against the US Dollar, while depreciating 3.2% against the Euro and 4.1% against the Pound Sterling. In July the Oil price (up 5.2%) lagged both the Platinum price (up 8.5%) and the Gold price (up 9.5%) in US Dollars. In December the Platinum price (up 8.2%) outperformed both the Gold price (up 3.7%) and the Oil price (up 5.7%) in US Dollars.
