Just when we thought it was all over…
“The thing about Christmas is that it almost doesn’t matter what mood you’re in, or what kind of year you’ve had – it’s a fresh start” – Kelly Clarkson
“We have made it – the last month of this surreal year is finally here!” This is the opening phrase I used in the November 2020 newsletter and although this year has been somewhat surreal, we were certainly more prepared as the world continues to grapple with the Covid-19 pandemic. We do hope that it has been an easier year for you and your family. May the possibilities of 2021, become a reality in 2022 for us all!
Looking back at the last quarter…
Spring has come and gone and the start to summer has been filled with much needed rain! The warmer days have reminded us that we are in for a hot three months ahead. Perhaps a warmer summer is what we need to brighten up our days and remind all of us that the sun will shine again!
… Local government elections …
On the 1st of November, the municipal elections took place and what day it was! The poor voter turnout [only a total of 12.3 million of the 26.1 million registered voters made their mark] was a clear indication to the governing party that the citizens of South Africa want change. The smaller parties will be happy with their progress and will look forward to building on their gains in the National Elections in 2024. A period of introspection seems necessary for both the ANC and the DA, who lost ground; with the ANC dropping below 50% for the first time in our democratic history. We do hope these results improve the service delivery we receive at municipal level especially with the national elections less than 2 and a half years away! We will also be keeping a close eye on the ANC elective conference set to take place in December 2022.
… Interest rates and inflationary pressures …
The Monetary Policy Committee [MPC] raised our repo rate by 25 basis points [bps] to 3.75% [depicted in the adjacent graph]. In October the US Consumer Price Index printed at 6.2% year-on-year, the highest in around 30 years meaning global inflation is becoming much harder to ignore, as is the rising oil prices, local electricity tariffs and a weaker rand. Escalating SA public sector wage demands are still a key unresolved risk, which may grow well beyond economic productivity gains, having a second-round inflationary impact on national prices. The South African Reserve Bank [SARB] governor, Lesetja Kganyago, said that if such effects take hold, it will be too late to act and hence the recent hike is to try and remain ahead of the curve.
Although there have been suggestions of a rate hike at every meeting next year [takes place quarterly], Kganyago has attempted to temper this by mentioning that further increases to the repo rate will be ‘gradual’ – this statement presumably made with a weak and indebted RSA consumer in mind. While gradual increases in the repo rate have a negative impact on those who are repaying any forms of debt, it certainly is a positive for those who are saving. Despite the rate increase, we have still seen continued ZAR weakness – unfortunately the timing of the new Omicron Covid-19 variant drowned out any positivity in our markets and has created a risk-off environment. We will continue to see volatility in markets across the globe as the world grapples with the virus and ongoing political pressures. As you are well aware, we are here to guide you through these uncertain times and are pleased that our clients came through the initial lockdown in 2020 relevantly unscathed with much better return numbers seen in 2021.
Welcome 2022…
We thank you for your ongoing support and for trusting us to grow your wealth which is always our greatest concern. As usual, please feel free to contact us should you wish to make an appointment or chat over the phone – we look forward to seeing you all in 2022.
Please note that our offices will close at 16h00pm on Friday the 17th of December 2021 and will reopen on Monday the 3rd of January 2022 at 08h00am.
