The beginning of the Pandemic lockdown feels like ages ago and we are getting used (or frustrated) to the new normal.
The initial Pandemic panic during March had a massive sell off in a the World’s financial markets. Most governments implemented harsh economic lockdown measures, restricted economic activity and the movements of citizens. This sell off trend turn around during April and a global V-shape recovery was witnessed. The main contributors to this rally were economic and financial stimulus provided by governments and easing of fears around the future economy growth.
Our Portfolios performed well in a volatile year ending July 2020, beating most of the competition.
Bovest BCI Conservative 6.51% (Category average: 4.35%)
Bovest BCI Managed 7.15% (Category average: 3.45%)
Bovest Worldwide Flexible FoF 15.93% (12.71%)
How are we positioned going forward?
With lockdown measures being strict and our local economy being put under pressure, the local investment sentiment turned negative. This negative sentiment resulted in the selloff of shares on the Johannesburg Stock Exchange (JSE) leaving some SA equities at Black Friday Sale prices. Investors can’t ignore the fact that high-quality companies with strong balance sheets offer value at current prices. The recent interest rate cuts is also bullish for growth assets and increases the odds that domestic growth assets will start to catch up on the last few years under performances.
On the global side it is unlikely that these markets will re-test their 2015 / 2016 lows. Most companies already priced in that forward earnings are going to be lower with the affect of Covid -19 settling in.
If we see positive earnings come out after that and while all else are equal it will be supportive of global equity markets. With this being said there remains uncertainty in the market about whether there will be a second wave of Covid -19 and the trade wars heating up again between USA and China.
It is too early to be overly optimistic and we are neutral in our asset allocation at this stage. If we see a clear movement in the market going forward we will adjust accordingly.
PJ Botha CA(SA), CFP ®