As the first half of 2020 ends and the second half begins, it is fitting to take stock of the past six months of the calendar in an effort to make sense of just where we currently stand.

January and February were months filled with angst as we witnessed this unbeknownst ‘Chinese Virus’ spreading across China’s industrial heartland – slowly at first, and then accelerating. By the time mid-February was upon us, the globe came to realise just how dependent we were on China and their impact on supply chains, so critical for the functioning of the world’s intrinsically globalised economy. As February drew on, the denial of the Covid-19 virus spreading beyond the borders of China began to wane into the realisation of a possible global pandemic. And then markets turned.Following an 11-year bull run in the wake of the recovery from the Global Financial Crisis, markets fell almost 35% in little over a month as economies across the world shut down all non-core functions, and we entered the now new-normal phase of ‘lockdown’. Thankfully, thus far, the Bear Market of March 2020 appears to have been just that, as the world’s stock and bond markets reacted positively to the actions of Central Banks and governments with the world’s single greatest, concurrent stimulus package ever seen, in a concerted effort to limit the economic fallout caused by shutdowns and the Virus.

The second quarter of 2020 (1 April to 30 June) will be recorded as one of the single, strongest quarters in markets’ history, albeit off a very low base. And as we stand looking at our own country’s rising infection numbers and the ‘second wave’, we are reminded of the lessons learnt from earlier this year.

While global stock markets are trading near record highs on positive sentiment that the stimulus packages will avert an all-out economic collapse, we regard it short sighted to ignore the macro-economic facts on the table and the precarious position economies, like our own, find themselves – rising debt, low growth, high unemployment, and a growing distrust in the government of the day. Speaking with David McWilliams the other day, the renowned Irish economist and part-time stand-up comedian, and hearing the similarities between our own fears in SA around the rise of centrally controlled policies and nonsensical rules with those of the average European, and the challenges we see are certainly not unique to the Beloved Country…

As we stand on the brink of the second half of 2020, ‘The Year the World Stood Still’, we remain both cautiously and strategically positioned across all our funds and strategies – not losing sight of the risks, nor ignoring the opportunities. The world has just faced one of its toughest 3-month stretches in all of history, while stock markets had their best 3-months since 1998. Why in the world would anyone not want to be an investor now!
With infections climbing all around us, stay safe, stay home if you can, and may you be blessed with a healthy and successful month ahead!

Steve Crouse
Chief Investment Officer and Senior Adviser