The Johannesburg Stock Exchange (JSE), having been through a particularly volatile period with lows of 51684 being seen in October, ended the quarter on a positive note at 57091, which is the highest we have seen the JSE All Share in some time.

The strong rebound can be attributed to some of our more favoured companies declaring good results. Food retailers in particular have seen concentrated spend during the lockdown period.  Some of our banking and property stocks are recovering from oversold positions and in certain instances, we have seen very good management as is the case with Growthpoint, who shored up their balance sheet by declaring a rights issue.

On the downside, the tourism and hospitality sectors are still facing significant challenges as they struggle to recover which has led to a significant spike in unemployment figures.  It remains to be seen when global travel and tourism will normalize.

We have received further downgrades from the global rating agencies and this has the knock-on effect of increasing our borrowing costs from global lenders.  Amazingly, our Rand strengthened considerably and although debatable, it seems international investors are on the hunt for yield as we do have a semblance of income on deposit.  Despite the record low interest rates in South Africa, when comparable to global interest rates which are at or very close to zero, they do offer some refuge for those seeking income.

Income investors, both locally and globally, have had a difficult year with fixed deposit and daily call rates being slashed as central banks and governments attempt to shore up economies. This, coupled with some companies suspending or passing their dividends, has caused a drop in income that may result in income investors to taking on more risk by investing in equity markets to generate both income and capital returns.

Domestically, we have seen our Government wrestling with its bloated public service sector wage bill and the significant threat it poses to the country’s balance sheet. The continued, and now stark division, within our ruling party creates further economic uncertainty, however we have seen some high-profile arrests which is encouraging. Hopefully this leads to some accountability which is desperately needed in order to inject confidence back into our economy.

Internationally, the American elections were predictably, not straight forward with Donald Trump still refusing to acknowledge his loss to Biden over a month after the election. One would sincerely hope for a smooth transition to the new leadership, however, whether or not Biden benefits the American economy as much as Trump did, remains to be seen. One of the areas to pay attention to going forward, is the possible implementation of tax increases on corporate America which, to date, has been a high growth area in the global economy.

Brexit, and the impact on the European Union continues to be brought into sharp focus, although there have been significant strides made towards ensuring an outcome is reached.  The biggest sticking point to date seems to be the fishing rights between the French and English over some sections of the English waters.

The reintroduction of lockdown in a number of Northern Hemisphere countries, as well as strict travel restrictions continues to cause anxiety.  In South Africa, one remains hopeful that infection rates, both locally and globally, do not significantly increase over the festive season resulting in stricter controls in the New Year.  The South African economy is still reeling from the effects of lockdown and can ill afford further restrictions to its already fragile economy.

At this point, one needs to pause and consider if we have seen the full economic impact of the lockdown on global economies.  If further lockdowns are instituted, will this see the digital divide becoming entrenched?  Our dependency on technology has been highlighted during this pandemic and it will be interesting to see if social, business and spending habits revert to pre-lockdown norms or if we will continue to rely on technology.

Global markets have performed satisfactorily during the quarter and, in some instances, a resurgence of some of the out-of-favour and more traditional stocks have come into the limelight.  There has been a stark contrast between businesses that have been able to adapt nimbly and quickly, which has allowed them to continue operating and in some instances flourish, while other businesses who were not that adaptable have struggled. High street fashion retailers and property companies, in particular, found it more difficult to adapt and may continue to struggle in the current environment.  Some of the oldest and more traditional entities have closed their doors for good and we may see more following this course in the near future.

Global central banks have undertaken to support struggling economies and there seems to be a shift to being more inclusive as opposed to prescriptive. This, coupled with the possibility of a vaccine being developed, we will hopefully see a return to normality as vaccines are launched.

I would like to extend my sincere gratitude to our investment family for their continued support and to my colleagues who, despite the difficulties experienced over the past year, have embraced the challenges with positivity and enthusiasm.  We count ourselves extremely fortunate to have been able to continue to function and be nimble enough to adapt to this ever changing environment.

Our offices will be closed from the afternoon of Wednesday 23 December 2020 until Monday 4 January 2021. Although, as most of our investment family know, we are contactable on our cellphone numbers in case of emergency.

I would like to take this opportunity to wish you a happy, healthy and very blessed festive season.  To those travelling during this time, please take special care and we wish you safe travels.  We, as a team, look forward to embracing 2021 and the opportunities that it may bring.

Thank you for uploading your documents