August overview

South Africa spend August under adjusted alert Level 3 Covid lockdown and according to Department of Health data, 12.6m vaccines have been administered by the end of August. At the beginning of the month President Cyril Ramaphosa announced his long-awaited Cabinet reshuffle. The biggest surprise was Finance Minister Tito Mboweni’s replacement with ANC economic policy head Enoch Godongwana.

The revised estimate of nominal GDP in 2020 is R5.5 trillion, an increase of 11% compared with the previous estimate of R4.9 trillion. Despite this positive news, the employment situation in SA remains dismal. Only 38% of the working age population is currently employed and only 26% have a job in the formal sector, compared to 29% before the pandemic. This data does not yet include the impacts of the riots and looting that took place in July.

SA’s Manufacturing PMI recovered strongly in August, bouncing to 57.9 index points from the record low of 43.5 points in July. In contrast, supplier deliveries dropped during August, suggesting that supply chains are still not working optimally, partly due to the July unrest.

Globally, uncertainty grew in August due to concerns about the more infectious COVID-19 Delta variant and questions about vaccine efficacy. Increasing regulatory pressure on technology stocks and the potential geopolitical implications of the collapse of the Afghanistan government, precipitated by the US military’s withdrawal from the country, also caused market jitters in August.

Despite the hiccups along the way, most global equity markets ended August in the green. Major US equity indices, the S&P500 and the Nasdaq, closed at all-time highs as the US Federal Reserve appeared in no rush to move away from its massive stimulus program.

August also saw a broad-based sell-off on the commodities front. Gold remained nearly flat, but both platinum (-6.3%) and palladium (-3.4%) continued to decrease from July’s levels. Iron ore plummeted by 13.9% and oil prices dropped 5%.

Disclaimer:

The above information is only for informative purposes and cannot be seen as advice as defined in the Financial Advisory and Intermediary Services Act, 37 of 2002. Although the necessary measures were taken in the preparation of this document, RiG Advisory Services (Pty) Ltd cannot be held responsible for any actions taken as a result of this document. Consult us for personal advice that will be appropriate for your unique circumstances. RiG Advisory Services (Pty) Ltd is an authorised financial services provider (FSP number: 44730).