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The All Share closed higher at 55349 compared to the close at the end of August of 55259. This was despite the continued political headwinds, as well as the now increased likelihood of a ratings down grade early next year. Within this increase, some of our favourite stocks have enjoyed good results and subsequently good gains. Even with the consumer having less disposable income in their pockets, some of our retailers, including Spar and Mr Price came out with impressive sets of numbers in a tough trading environment and even with general sentiment being negative, it is encouraging to see that on the presentation of their results, these companies are enjoying strong rebounds in their share prices, which bodes well for a lot of our favourite companies on the Johannesburg Stock Exchange (JSE).

The political environment in South Africa continues to be of concern, in particular our State-owned entities requiring desperate attention. The recent strikes in South African Airways could well see the demise of this entity. This, coupled with Eskom and their struggle to keep the lights on, has resulted in international rating agencies warning South Africa that there may be a downgrade as early as next year. We continue to see an exodus of foreign shareholders as they look to avoid any fallout from a derating by the ratings agencies, although many pundits in South Africa predict that this is “already in the price”. Although Cyril Ramaphosa and those close to him are doing their utmost to turn the politics and policies within government around, it may take longer than the ratings agencies are prepared to be patient.

Despite all of the headwinds, our Rand has strengthened from 15,34 at the end of August to 14,64 at the end of November, although weakening slightly to the Pound from 18,61 to 18,95. This indicates how strong the Pound has been relative to global currencies and despite the Brexit disaster, some positivity and social cohesion seems to be returning to the United Kingdom. However, this may be short lived, given the elections on the 12 December. Our Rand will continue to be volatile during December as we are such a thinly traded currency and given the likelihood of a ratings downgrade, we could see persistent volatility into next year.

The United Kingdom environment, as discussed above, has some glimmers of hope and one would sincerely like to see some level of sanity prevailing within the parliamentary and political regimes in the United Kingdom. The likelihood of a stronger outcome at the elections for Boris Johnson would bode well for this region, should the vote go his way.

Donald Trump and his leadership in the United States, although this has been rocked by trade wars, the American markets reached all-time highs and with a perceived cooling of the tone between the US and China, we could see strong markets up until the end of the year in these developed countries. Some areas of concern, as a result of the trade war are the fact that European countries including Germany, have seen their manufacturing diminish and as such, concerns abound as to whether or not they are going to go into a technical recession. This does not bode well for the EU.

The continued and unfortunate unrest in Hong Kong has resulted in an escalation in global tension with China warning the United States to stay out of its business. This has the unfortunate opportunity of escalating further, should the Chinese decide to deploy troops.

Despite all of the above, and the political concerns in South Africa, there are still good values in the form of dividend income to be attained by investing in Blue Chip stocks. There continues to be a host of corporate options with many South African businesses looking to invest offshore in order to diversify earning streams.

It has been an exceptionally busy year for the team at Ewing’s and I would like to take this opportunity of thanking not only my co-Directors, but all of my colleagues for a happy, positive and supportive work environment. Lastly and most importantly, thank you to our investment family for your continued support during 2019.

Please note that we will be closing our offices from the 24 December 2019 and re-opening on the 06 January 2020. If you have any questions, queries or concerns please do not hesitate to contact either Gareth Collingwood or Iain Ewing.

Wishing you and your loved ones a very safe festive season and a prosperous New Year.