Tag: monetary policy

The Covid-19 crisis has brought much of the world economy to a sudden stop. Millions upon millions of people are in lockdown across the world, preventing them from working, buying, producing and selling goods and services. Global and local supply chains are interrupted, and small and large companies see a collapse in income. Households are under similar pressure.

Recent weeks have seen the local market hit by a triple whammy. Both local and global markets have crashed as the economic impact of the COVID-19 pandemic begins to be felt resulting in a market sell-off; a rapid decline in oil prices has created a global supply shock. In addition to that, ratings agency Moody’s downgraded South Africa’s credit rating to junk or sub-investment grade.

Investors’ appetite across the globe for exchange-traded funds (ETFs) was strong in 2019 and shows little sign of slowing. I share some of the themes and trends that I see ahead in 2020. The tailwind for ETFs going into not only a new year but a new decade couldn’t be stronger. Last year, global ETF assets under management (AUM) surpassed US$6 trillion, and in Europe we broke US$1 trillion in AUM.1 

Despite various geopolitical and economic challenges at the beginning of 2019, markets managed to deliver very strong returns for the year. And investors will be relieved to see that equity markets look set to start 2020 on a slightly better footing, as many of these uncertainties have been addressed to some extent over 2019.

The Reserve Bank’s decision to hold rates, even with the recent instability in stock and currency markets, will help consumers to plan ahead when managing their finances.

Few currencies matched the rand’s turbulence in 2017, with factors such as Trumpenomics, the firing of finance minister Pravin Gordhan and the appointment of Cyril Ramaphosa as ANC president, contributing to the R2.04 price swing during the year.