Exciting News …
We are delighted to confirm that the SA Reserve Bank has just authorised Finlaw to purchase and sell foreign exchange for our clients. This means that we will be able to directly assist clients with investing their annual foreign discretionary allowance [up to R1-million] and tax clearance annual investment allowance [up to R10-million] in First World currencies. The money once converted into foreign currency can be held right here on call in a foreign currency account – or sent directly offshore for investment via our advisory services. Clients will be able to benefit from much reduced costs of purchasing or selling foreign currency. Contact us any time after 20 June when our systems will be tweaked to handle everything online.
Covid-19 – The Story Continues …
In our February 2020 newsletter we included the below chart which we have updated ending May 2020 on the coronavirus cases in China.
What a difference 3 months has made in China – the death rate has increased slightly BUT the number of new confirmed cases is almost non-existent! Although this chart provides some relief there are still many more countries [like RSA] who have yet to reach their peak [experienced in China on the 04/02/2020] of infections! We may all be feeling a little relieved now that the restrictions and severities of the initial phases of lockdown have eased somewhat; but as we adapt to Level 3, it is important that we continue to remain cautious and ensure personal hygiene remains a big priority. South Africa has now reached the big mental mark of 50 000 confirmed cases [and rising quite rapidly] and our death rate continues to rise, now well above the 1000 mark.
The last few months [which have felt like years for some!] have undoubtedly been tough; tough for investors, parents, children, employers, essential workers, non-essential workers, and the list goes on. While we all remain rather anxious and perhaps even frustrated, I thought this was the perfect opportunity to shed some positive light on what has occurred since the Covid-19 take-over. The facts listed below all occurred in April alone – perhaps a brighter indication of what is to come:
- On Tuesday the 28th of April, the JSE closed at its best level in nearly 8 weeks as market sentiment was buoyed by the news that several countries, including South Africa, would soon be easing lockdown regulations. The local market was up over 13% for the month of April in line with the European markets as more countries resumed economic activity.
- South Africa entered Level 4 of the risk-adjusted Covid-19 strategy on the 1st of May – although this was still rather restricting, it was certainly a move in the right direction.
- The ZAR strengthened by over 4% against the US Dollar at the end of April. This strengthening was largely because global risk appetite had eased slightly following positive data from a coronavirus drug trial in the US.
- According to Stats SA, inflation [CPI] was sitting at 4.1% – a much lower number than one would have thought.
- The Repo Rate was at 4.25% [Prime Rate was at 75%] – providing some debt-relief for so many South Africans.
- The average brent crude oil price decreased markedly – from $35.25 to $20.00 per barrel. From the 6th of May the official price of 95 Petrol [Inland] was R 12.22 per litre and diesel [low sulphur] was R 11.17 per litre.
- South Africa’s economy was expected to see some slow recovery as approximately 1.5 million workers returned to productivity in April. A quicker recovery could see the number of people set to lose their jobs decrease from an expected 7 million people to 3 million people.
- Telkom, along with other Internet Service Providers, have cut prices and increased connection speed for consumers – a positive for us all as we adapt to working from home.
We have seen many of these positive numbers continue in May with the JSE up almost 13% [as at 31/05/2020] since the 27th of March when lockdown was first implemented. South Africa has now entered Level 3 of the risk-adjusted Covid-19 strategy [with effect from the 01/06/2020] so we are still moving in the right direction! The ZAR has strengthened over 4% against the USD from the 27/03/2020. CPI is still coming in at 4.1% with the Repo Rate now at a remarkedly low 3.75% [Prime Rate now at 7.25%]. Although we have seen a rise in the brent crude oil price, the Petrol and Diesel prices are still far lower than many of us can recall. We continue to see slow recovery with a further 8 million workers returning to work since the 01/06/2020.
The above just reminds us that amongst all the negative news we are currently subjected to daily, there really is some positive news that continues to give us hope!
Message for our clients
While the situation we are currently in may leave us all feeling a bit uncertain about the future, we encourage you to remain focussed on your long-term investment objectives and not to get too panicked about current markets. Our offices are now open and fully operational – please feel free to contact us with any questions / concerns you may have – we really would love to chat.
We thank you for your continued support during this untoward time.
Kind regards
Stacey Barron
Finlaw Consulting
