So that was March

It's been a year since we had our first lockdown and what a year it has been. Most of us have lost someone dear and had our lives impacted in many ways.

There is, however, light at the end of the tunnel.

Vaccines are now available and seem to be working…..those who have been vaccinated appear to have a much lower chance of dying and becoming seriously ill than those who haven’t.

More than 2.5m people are being vaccinated every day in the United states. It is estimated that they will be reaching population immunity by the middle of this year. This coupled with the massive stimulus can only help the American economy.

This is good news as the world’s economy is massively impacted by what happens in the USA as it is the biggest economy in the world.

Source: Glacier

If you look at the “soccer ball” graphic above, you will see on the bottom right that South Africa makes up only 0.43% of the world’s economy. This is one of the reasons why I recommended that clients diversify their assets globally. You do not want to concentrate all your wealth in such a small part of the world.

The rollout of the vaccines in South Africa has been poor and we are nowhere near where we planned to be. It looks like we will only get to the stage of population immunity by the end of next year

Investments

The SA stock market declined for most of the month and was down by 4% at one stage. A rally in the last week resulted in the JSE being down by only 1% for the month.

If you had investment internationally, you would have done well as the S&P index was up by 3.9% and the Dow Jones was up by 6.9% over the last 30 days of March

The question we need to ask is whether this growth makes sense. Major parts of the world are in lockdown and many people ill and unemployed.

I have spoken to many people and attended many economic and political briefings. I am cautiously optimistic for the following reasons:

Global trade is up by 20% and the expectation is that the growth in the world economy will be above average for the next two years
There is a massive pent-up demand for travel and entertainment which will be unleashed towards the end of the year when population immunities are reached
Commodity exports from SA are up by more than 50% in certain sectors and reports are that this is sustainable over the medium term.
South Africa has had a decent agricultural season
Inventory levels are very low as can be seen below. These will have to be replenished.