While South Africa is still dealing with the effects of the third wave of Covid-19 infections, there is some good news that has come out of the world-wide pandemic. The way in which the developed world’s leaders reacted to the most recent economic crisis can be a helpful blueprint for when the next “unknown-unknown” hits the global markets.

According to Professor Brian Kantor from Investec Wealth and Investment, overcoming the previous two global economic calamities relied essentially on governments and their central banks. In the case of the global financial crisis, it required central banks to shore up the global financial system – buying assets from banks and financial institutions on a vast scale, in exchange for central bank money.

Professor Kantor explains that the responses to the crisis of 2020, at least in the developed world, were more immediate and on a larger scale than after 2008. The central banks added much direct income relief to their monetary injections. They succeeded not only in reducing the pain of lockdowns, but also in ensuring that the demand for goods and services would recover in line with the recovery of supply made possible by a return to normality.

Judged by the signals provided by the markets the economic crisis is now well behind the developed world. US, emerging market (EM), and therefore South African companies, are now worth significantly more than they were when the lockdowns became a reality in March 2020, when the US Index lost 13%, the EM Index 17% and the JSE gave up 27% of its US dollar value. The JSE had lost 14% of its value the month before.

The JSE from these lows has been a distinct outperformer, in dollars and in rands. The JSE has gained 50% compared to a 30% gain for the S&P and EM indices, when converted to rands. In dollars, the gains are even more impressive. The JSE is up 86% compared to the 66% and 61% gains for the S&P and EM since the crisis lows.

The above clearly illustrates that sticking to your long-term financial plan is the best defence against the destructive effects of an economic crisis on the value of your accumulated assets.

In this issue we take a look at the current state of the buy-to-let market, we bring you the latest on creating a first-class outdoor entertainment area and share why you should consider visiting the West Coast during flower season.

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

Enjoy this issue!

Best regards

Johann Joubert