Market Commentary: PMK Group
Market Commentary Latest Rates USD/ZAR 17.53 GBP/ZAR 20.53 EUR/ZAR 18.92 AUD/ZAR 10.18
Global
2020-03-23
Global markets are still in a sea of panic, largely unmoved by central bank’s stimulus packages around the world. The Fed has now cut rates by 150 bps, the BOE by 65 bps and the SARB by 125 bps since January. Covid-19 continues to weigh on the global economy, with more than 330,000 cases and 14,000 deaths reported worldwide.
EU to announce fiscal stimulus deal soon (the Germans are indeed worried)
Bloomberg reports that the package under discussion in Congress could reportedly top $2T, or 10% of GDP and could include $700B in Fed grants and loans.Treasury Secretary Mnuchin said package would be aimed at supporting US economy through next 10-12 weeks. Includes aid to small businesses to help keep workers, direct cash payments to some Americans (~$3K to average family of four), help for adversely impacted industries, enhanced unemployment insurance (which would add hundreds of billions to the bill), a meaningful new liquidity package in coordination with Fed, and ~$110B in financial support for hospitals.
SA
On local shores, the number of confirmed cases stands at 274, with the country awaiting President Ramaphosa’s briefing this morning. Already down 13% since the beginning of March, and 5.5% last week alone, the battered and bruised local unit still needs to overcome Moody’s credit rating review this Friday.
Why Zwele Mkhize is right to moot tougher measures - Health Minister Mkhize knows of the danger of the virus spreading beyond the middle class. He also knows that jurisdictions, such as Singapore, Hong Kong and Japan, which have had some success in flattening the infection rate curve took very stringent measures early on and already enjoyed high levels of enforcement and compliance regarding hygiene. Not only does this not apply here but there is even a history of denial in the case of HIV. Hence he spoke of sending in the Army to enforce regulations and practices around hygiene.
Can SA government walk the tough talk? - Government handling of defiance from the likes of Pastor Bheki Ngcobo, a leader of the KZN Zionist Church, and the mooted march by 20000 Nehawu public sector trade union members, albeit in groups of less than 100, will be an early test of its resolve. Bheki Cele, Minister of Police, said on Friday he would disperse them if they dared show up and arrest the organisers.
References: PMK investment committee, Exchange 4 free , Momentum Investment Consultants, Momentum securities
SA Government action timeous, but only just- With so many other jurisdictions in the West suddenly waking up last week to the need for strict measures including lockdowns, SA would have looked behind the curve had it acted a day later.
Now for economic reality: something’s got to give? - Continuing to use taxpayers’ money for a vanity project (SAA) when it is needed to help small businesses and the unemployed get through this recession won’t go down well. Can the newfound decisiveness in health transmit to the economy? Otherwise the newfound confidence in the President might fade just as quickly as it came.
President Ramaphosa is expected to address the nation again today having met with various stakeholders following his State of Disaster address last Sunday.
The lacklustre tone in US futures markets, a generally downbeat performance in the Asia-Pacific region and specific technical elements should contribute to further selling pressure on the JSE at the commencement of today’s session.
Despite clear structural weakness on the domestic market the JSE-ALSH has exhibited its most significant attempt as of yet at building a near term support structure. The ability of the market to hold at this level over the next 48 hours will hinge almost entirely on news surrounding the potential for an agreement on the US stimulus package which will total more than $2 trillion. Additional financing programmes were also touted by US Treasury Secretary Mnuchin.