Not a member? Register | Lost your password?

Weekly Commentary - 03 February 2021

Vaccines might not be the magic bullet to normality

What Made The Headlines ...


With events like GameStop, Trump supporters storming the U.S. Capitol leading to Donald Trump becoming the only president in history to be impeached twice, and Bernie Sanders becoming a meme trend, the first four weeks of 2021 have been jaw-dropping, even by 2020's standards.


Frank Appel, chief executive of DHL, which operates more than 260 aircraft, has accused governments of failing to prepare adequately for the rollout of Covid-19 vaccines, blaming distribution delays on a lack of local storage and delivery solutions.


It seems as if South Africa however, might be doing things right.   Biovac has a three-month contract to store and distribute the 1.5 million AstraZeneca vaccine doses which will be used to inoculate the country's healthcare workers. The first one million doses of the vaccine arrived on Monday; it is currently being tested and stored at the right temperature and will be distributed to the different provinces later this month.


South Africa has also seen a steady decline in Covid-19 cases and hospital admissions, leading to an easing of our lockdown restrictions.


Today, Amazon shareholders will celebrate a smashing final quarter of 2021 after the group last night reported an astonishing 44% surge to $125.56bn in revenues. But some Amazon co-owners may be concerned that founder Jeff Bezos is handing over the CEO reins. Jeff Bezos will step down from his post to become executive chairman, marking the most significant change in leadership of the tech giant since he started the company in a Washington state garage more than 26 years ago.  Andy Jassy, the head of the company's cloud computing unit, will become the new CEO.

Global Weekly Commentary


South Africa

Today’s most prominent news:  Ford and its suppliers invest R20.13bn in South Africa, making it the biggest in Ford's 97-year history in the country.


According to data from the Johannesburg Stock Exchange, last week marked three straight weeks of inflows with offshore investors buying R2.68bn of bonds.  South Africa has seen slightly more inflows than other emerging markets back into local assets by foreign investors, largely a function of the high yield on offer with the central bank set to keep lending rates steady in 2021. 


IHS Markit's Purchasing Managers' Index (PMI) rose to 50.8 in January from 50.2 in December, above the 50 level that denotes expansion for the fourth month in a row.


The Yoco Small Business Recovery Monitor (released on Monday) that tracks the total amount of money small business is making on sales through card machines or online payments,  showed that South African small businesses' turnover was 71% of the past month. 


Small businesses in KwaZulu-Natal, the Eastern Cape and Northern Cape were faring better, with a turnover of 103%, 83% and 76%, respectively. The Western Cape's businesses were in fourth place, at 75%.


The small businesses with the least turnover during this period were in the North West, Gauteng and Limpopo, at 57%, 62% and 66%, respectively.


According to Yoco data, the three biggest categories of small businesses were food, drink and hospitality, which generated a turnover of 63% during the lockdown, followed by health care, beauty and fitness at 104%, and retail at 93%.


United Kingdom

During its first month free of the European Union, the U.K. navigated their new reality.  Minor/temporary niggles like online shopping from the E.U. being more expensive, smaller U.K. businesses not coping with the red tape of selling their products to the E.U., and Northern Ireland shoppers facing empty shelves could, in an already difficult economic environment, mean a long road back to growth if they aren’t resolved.


Extended furlough schemes seem to be keeping unemployment in the U.K. relatively low at 5%.


On a monthly basis, in the U.K., the seasonally adjusted house prices dropped 0.3% in January, compared to market expectations of an advance of 0.3%. In the previous month, house prices had recorded a revised rise of 0.9%.


The housing market has defied the broader economic downturn since the pandemic began with prices hitting a four-year high in November, driven in large part by a stamp duty holiday introduced last July as part of a government stimulus package during the pandemic.  Beneath the headline figures, the latest housing boom has been driven by wealthier homeowners, while many first-time buyers and those with their feet on the bottom rung of the property ladder have been excluded.


The planned removal of the stamp duty holiday on March 31, followed by the winding up of the furlough scheme a month later, will test the market's underlying strength.


The stamp duty holiday was introduced in July and exempted buyers from paying the transaction tax on the first £500,000 of residential property purchases, saving them up to £15,000.


B.P. reported its first annual loss in a decade after a 96.0% drop in fourth-quarter profit as the U.K. oil major continues to reel from the hit to energy demand from the pandemic.


The U.K. is formally applying to join one of the world’s largest free-trade areas, deepening trade ties with some of the fastest-growing markets in the world. International trade secretary Liz Truss will speak to ministers in Japan and New Zealand today to request to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), with formal negotiations set to start in the weeks ahead.  Joining the CPTPP would deepen the U.K.’s access to fast-growing markets and major economies, including Mexico, Malaysia and Vietnam, to benefit U.K. food and beverage businesses.



European markets saw a slight drop during the month with many European countries still firmly in the pandemic grip. Germany and France (Europe’s largest economies now that the U.K. is no longer in the union) saw a consumer sentiment slide.  Confident consumers are generally a leading indicator of strong spending, which in turn leads to economic growth.


Italy’s bonds and stocks surged after Mario Draghi, the former European Central Bank president who brought calm to the region’s markets, was tapped to be the next prime minister. Investors hope he can usher in political stability after the collapse of the ruling coalition and utilise European Union funds to help the economy recover from Covid-19.


In 4Q20, the flash gross domestic product (GDP) registered a drop of 2.0% on a quarterly basis in Italy, less than market expectations for a fall of 2.2%. In the prior quarter, the GDP had recorded a rise of 16.0%.


Siemens rose 1.8% as the German engineering company raised its 2021 outlook after beating first-quarter expectations on faster-than-anticipated recovery from the COVID-19 downturn in China and Germany.


Drug company GlaxoSmithKline announced a €150mn ($180.7mn) partnership with German pharmaceutical CureVac to develop new COVID-19 vaccines. Shares rose 0.7%.


In France, the preliminary E.U. normalised consumer price index (CPI) registered a rise of 0.8% in January, on a YoY basis, higher than market expectations of an increase of 0.4%. In the prior month, E.U. normalised CPI had recorded an unchanged reading 0.0%.


United States

January was a relatively dull month for the U.S. stock markets with only one interesting story to tell, GameStop.  Robinhood, a financial services company, is now at the heart of a “David vs Goliath” battle between meme-loving Reddit users and Wall Street hedge funds. The funds had “shorted” GameStop (essentially betting that GameStop’s stock would drop in value), and thousands of small investors coordinated a mass stock-buying campaign on Reddit to pump up GameStop to (at one point) over $480 a share. The hedge funds who bet on GameStop stock falling ended up losing billions.


On a different note, U.S. equity futures traded higher, as investors seized on positive results from Amazon and Google parent Alphabet, along with a raft of continental earnings from Siemens, Vodafone and more.


Tesla advanced 3.9%, even after the company moved to recall roughly 135,000 Model S luxury sedans and Model X sport-utility vehicles over touch-screen failures.


In February, the economic optimism index recorded a rise to 51.90 in the U.S. The economic optimism index had registered a reading of 50.10 in the previous month. Inc, in its 4Q20 results, stated that its revenue increased to $125.56bn from $87.44bn posted in the corresponding period of the previous year. Its diluted EPS rose from the same period of the prior year to $14.09.


In its 4Q20 results, Pfizer Inc revealed that its revenue rose 12.0% from the same period of the preceding year to $11.68bn. Its diluted EPS stood at $0.10, compared with a loss per share $0.06 recorded in the previous year's corresponding period.  Pfizer expects about $15.00bn in revenue this year from its Covid-19 vaccine developed with BioNTech and has raised its 2021 profit guidance on hopes that having one of the first and most effective vaccines will boost its prospects.


The market value of U.S. stocks is now 185% of GDP, a record high which means the value of stocks exceeds GDP by a whopping $18tn. The ratio of total market value to after-tax profits is at multi-year highs.


U.S. unemployment is at 6.7%. While down from its peak of around 15% in May last year, unemployment has still doubled since the end of 2019, spelling trouble for the U.S. growth outlook.



Manufacturing in China and Japan suffered in January, while South Korea and Taiwan saw improvement amid a resurgence in coronavirus infections, underscoring the fragile nature of the region's economic recovery.

China's Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) dropped to 51.5 last month, its lowest level since June last year and easing from December's reading of 53.0. Although it remains above the 50 mark that separates growth from contraction, the index was below a median market forecast for a reading of 52.7.

China's economy expanded at a faster-than-expected rate of 6.5% in the fourth quarter last year, as factories raced to fill overseas orders amid a surging pandemic.

Shares in Chinese technology behemoth Alibaba were up 0.38% in the special administrative region after it reported its first profits from its cloud operations.  A CNBC report also suggested the firm was considering raising to $5bn in dollar-denominated bonds.

Korean carmaker Kia Motors rocketed 9.65% after a local media report said the company was preparing to sign a KRW 4trn deal with California-based consumer technology giant Apple to build electric automobiles.

Japan's final au Jibun Bank PMI fell to 49.8 in January from the previous month's 50.0 reading. The fresh state of emergency measures in areas accounting for 55% of the country's population hurt employment and output.

The final Nikkei Japan services PMI dropped to 46.10 in January, in Japan, compared with a level of 47.70 in the prior month. Markets were anticipating Nikkei Japan services PMI to ease to 45.70. The preliminary figures had recorded a fall to 45.70.  


Equity Indices (Price Only)


In Local Currency

In Sterling


Last Week


Last Week



FTSE 100





FTSE 250





FTSE All-Share






US Equities






European equities






Japanese equities





Hong Kong equities





Emerging Markets

Emerging market equities





Government bond yields (yield change in basis points)


Current Level

Last Year


10-year Gilts




10-year US Treasury




10-year German Bund






Current Level

Last Year














Japanese yen/USD




Commodities (in USD)


Current Level

Last Year


Brent oil (bbl)




WTI oil (bbl)




Copper (metric tonne)




Gold (oz)




Contact us: Durban +27 (0) 31 566 3365 | CPT +27 ( 0 ) 21 851 0920 | JHB +27 ( 0 ) 11 017 7230 | Email:
Disclaimer: The research report has been prepared for information purposes and does not constitute an offer. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and the company accepts no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this report


Connect with us