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November 2020 economic update

News of a vaccine during the month translated into November being a bumper month for global stock markets.

We made it! The last month of this surreal year is finally here! I’m sure you agree with us that we cannot wait to see this year in the rear-view mirror. Only one more month to go and hopefully, December will hold some cheer for all of us.

  • During the month of October, Joe Biden won the US election…we think. Technically it’s not official yet, but everyone other than Donald Trump agrees. From the market’s perspective, the close call on the outcome was almost better than having a clear-cut winner. With Biden winning the overall election, the Democrats controlling the House and the Republicans (most probably) keeping control of the Senate, there is no overwhelming majority to bring in the “bad for business” changes to tax legislation that Biden would have wanted to. It is safe to say that stock market investors won this round, but we are keeping a close eye on President-elect Biden to see how he plans to undo four years of breaking down trade relations with most of the world.
  • After another month of haggling, it seems we are no closer to a Brexit deal than we were last month. The general consensus is still that a last-minute deal will be agreed, so we are keeping a close eye on the pound as well as the UK markets…and whether they like it or not, the European markets and the euro as well. It will be a while yet before these economies are properly decoupled and at this stage, a deal will be positive for both the EU and the UK. If nothing else, then just because it brings some certainty to the markets.
  • Despite obvious economic challenges, vaccine news during the month translated into November being a bumper month for global stock markets.
  • Not only did our local market join the party, but the rand continued its strength throughout the month reaching R15.09 on the 26th and finally settling around R15.35 towards the end of the month – levels last seen at the beginning of March before our local lockdown commenced!
  • Not even a 60% increase in online sales on Black Friday could save the day for South African retailers, with the number of overall physical sales down by roughly 2 million transactions versus last year, according to Business Insider. This was the general trend globally with physical sales in the US plummeting by about 52%, while online sales increased by roughly 22%. All in all, it looks like Black Friday did well to give retailers a bit of a boost in a tough year, but unfortunately, the numbers still lagged 2019.
  • One-month index movements:
    • JSE All Share Index: 9.96%
    • S&P 500 (US): 10.75%
    • FTSE (UK): 12.35%

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Michael Haldane

Global & Local Investment Advisors

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