Monthly Market Update – 10/2020

Monthly Market Update

October overview

South Africans enjoyed the first full month of Level 1 lockdown in October, with almost all movement and economic restrictions lifted. In response to the destruction caused by the national lockdown, President Cyril Ramaphosa presented SA’s Economic Reconstruction and Recovery Plan to parliament on the 15th of October. The four strategic interventions outlined in the plan were infrastructure investment, energy security, employment stimulus and re-industrialisation.

After an unconventional one-week delay, to allow time to address the recovery plan, Finance minister Tito Mboweni delivered his highly anticipated Medium-Term Budget Policy Statement. In what remains an extremely challenging global and local economic environment, Mboweni confirmed that the economy is expected to shrink 7.8% in 2020.

The Absa Purchasing Managers’ Index (PMI) rose to a significant 60.9 index points, up from a revised 58.5 in September. The employment index also recorded an improvement for the fifth consecutive month.

Global markets were exceptionally turbulent in October. A burst of investor optimism was seen around mid-month as negotiations surrounding a second fiscal stimulus package in the US were said to be progressing. Markets were weighed down by uncertainty around the result of the US Presidential Election that was coming up in early November.

Concerns around Brexit resurfaced as the European Council meeting on the 15th and 16th of October passed without a deal being struck. There was also some positive news on the economic data front in that US GDP rebounded by a record of 7.4% in the third quarter of 2020.

With an economy that is now larger than before the pandemic took hold, China is anticipated to be one of the only major economies to achieve positive GDP growth for year of 2020. Commodities posted a negative return for the month. Energy was the weakest component with crude oil registering sharp declines.

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).

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