February provided some positive news in terms of the performance of the domestic financial markets, which seems to have largely ignored other local developments. The Bureau for Economic Research reports that the domestic economic data releases continued to show that there was still some recovery momentum in 2020Q4.

The most welcome news of the month was that SA started its vaccination rollout to frontline health workers. While finalising the rollout to the rest of the population is likely to be a long-term process, we can at least take some positivity from the fact that the process is now under way.

Also, in February, Finance Minister Tito Mboweni presented a budget which was an improvement compared to the October Medium-Term Budget Policy Statement (MTBPS), however, the fiscal crisis facing South Africa remains grave.

Delia Ndlovu, Managing Director: Africa Tax & Legal at Deloitte, says the minister outlined aspects that provided hope in these trying times, which include:

• Fiscal framework that supports the economy and public health services while ensuring the sustainability of our public finances in the medium term.
• Much improved economic outlook both globally and in South Africa.
• Meaningful progress in the implementation of our structural economic reforms, including a R791.2 billion infrastructure investment drive.
• Budget explicitly supports economic transformation and job creation.

Despite the message of hope projected by Minister Mboweni, South Africa faces a consolidated Budget deficit of 14% of gross domestic product (GDP), with gross debt at about 80% of GDP for the 2021 fiscal year. The minister emphasised that the path to fiscal consolidation remains difficult and will require South Africans to be resolute.

The debt trajectory is troubling as the government’s gross loan debt will increase from R3.95 trillion in the current year to R5.2 trillion in 2023/24. The cost of servicing the debt detracts from capital investment in infrastructure and investors remain sceptical about South Africa’s fiscal outlook and growth credibility.

While South Africa’s economy is expected to grow 3.3% in 2021 and average 1.9% in the next two years, the COVID-19 path remains uncertain and may remain a threat to the projected growth in the economy.

In this issue we share insights on protecting your share portfolio against a market correction and provide important information on credit shortfall insurance. For the adventurous souls we provide information of the exhilarating hobby that is flying a gyrocopter.

Errata: In our February issue we stated that an investment in a Tax-Free Savings Account is limited to a maximum amount of R33 000 per year, this amount was R36 000 for the 2021 tax year.

Please be assured of our commitment to assisting you in achieving continued financial success and prosperity.

Enjoy this issue!

Best regards

Johann Joubert

Protecting your share portfolio from a market correction
As global stocks hit historic highs, some pundits are raising concerns that stock markets are overvalued. Read more

What is credit shortfall insurance?
The moment you drive your spotless new car off the showroom floor, its value drops by between 15% and 20%.  Read more

Gyrocopters – safe, fun and versatile
They are a lot of fun to fly and, in the not-too-distant future, you might find yourself shuttling to work above the traffic in a gyrocopter. Read more