December 2020 – A note from the advisors at HMA

The 8th of December marked one year since the first Covid-19 case was confirmed in China. To date, the world has seen over 74 million Covid-19 cases and a death toll of 1.65 million people. South Africa went into level 5 lockdown on the 26th of March. As we sat in our homes and waited for the 35 days to pass, little did we know what lay ahead. Our first wave of infections only peaked in July, and our second wave is yet to peak.

An important difference is that we know a lot more now than we did in the first wave, and so the second wave has not resulted in pandemonium in the markets. The JSE All-Share index continued to rise across November and into December, and we are starting to see some of the hardest-hit sectors such as property recover. Analysts attribute improved market performance to the Biden win as well as the Covid-19 vaccine.

Global growth predictions for 2021 are issued with caution but fall within the range of 4% to 5%. Although emerging markets are expected to struggle, the outlook for South Africa is 3.1% growth (compared to a contraction in the region of 8% this year). There are a number of reasons for this confidence in South Africa, including the auction of the telecom spectrum, the procurement of energy from independent power producers, structural reforms, the restructuring of state-owned enterprises and increased infrastructure investment. Commenting on these projections, Sharon Wood says,

“It’s certainly been a year like no other and, although there is light at the end of the tunnel … there is still some way to go before forecasts about an economic rebound can be made with any certainty…The length of the tunnel every country is traveling through is still pretty much unknown and, at times, the lights may disappear when there is a twist or turn.”

While we celebrate the development of effective Covid-19 vaccines in record time, it’s no time for complacency. Vaccine roll-out across the globe will take many months, probably years. We cannot afford to tire of hand washing, mask-wearing and social distancing. The year 2021 is almost behind us and we’d like to wish you and your families a safe and happy festive season and a very happy new year. We look forward to seeing you in 2021.

Kind regards

The Team at HMA