South Africans are celebrating the move to Lockdown Level 2 as the number of new daily Covid-19 infections steadily declines. Yet the risk is that Level 2 might be too little too late for some sectors of the economy. Ahead of the President’s weekend address, the economy was running around 25% below trend, even though the bulk of the goods producing sectors had already reopened. The lifting of the alcohol and cigarette sales bans and the resumption of interprovincial travel and tourism should give the economy another leg up, but job and income losses have most likely reduced consumers’ purchasing power. Moreover, consumer behaviour may take some time to “normalise”.
Memes abound of people queuing at liquor stores, but should the National Road Traffic Amendment Bill become law, then the blood alcohol limit for driving will drop to zero. It is a case of having your cake (or Castle) but not eating (or driving) it. With the extension of the State of Disaster, the nightly curfew remains in force. This could arguably mitigate some of the risks associated with alcohol consumption.
What is certain is that we are still adapting to a world with Covid, and the road ahead will remain bumpy, particularly with the risk of a potential “second wave” amid fewer restrictions. With fewer restrictions comes greater responsibility. Similarly, with depleted returns from cash amid (much called for) record low monetary policy rates, achieving one’s investment objectives will require greater risk-taking. And greater risk-taking requires prudent risk management.
Matrix Achievements
- Level 2 B-BBEE contributor
- Matrix NCIS Fixed Income Retail Hedge Fund return for 2020 of 27% after all fees.
- Matrix NCIS Equity Fund ranks number 10 out of 117 funds in the General Equity space since inception.
- Amplify SCI Defensive Balanced Fund ranks number 3 out of 81 funds in the Multi Asset Low Equity space since inception.
- Matrix NCIS Fixed Income Retail Hedge Fund has returned Cash+10.8% since inception.
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