From pandemic to endemic?

As we make our way steadily through the Greek alphabet, do you also feel that 2021 has really been ‘2020 version 2.0 lite’?

After passing through 600-days of varying levels of lockdowns, the emergence of the Omicron variant of Covid is making the last few weeks of 2021 rather interesting. We started the year in the midst of the country’s 2nd wave, followed a few months later by the 3rd wave, and government’s broad, singular, heavy-handed lockdown approach. 2021 was seemingly just another 2020, except for markets that performed rather admirably and a vaccination roll-out that will hopefully be enough to limit the severity of future outbreaks.

As countries across the globe move towards “learning to live with Covid”, President Ramaphosa now appears to be on the path of our country finding our own way of adjusting to life with a virus that is becoming more and more endemic rather than pandemic. Whether this takes the form of annual booster shots, oral medication, continued mask-mandates, or ongoing forms of social distancing, what lies ahead remains uncertain. But as is evident from our own experience, coupled with that of Europe, Asia and the Americas, Covid is certainly not going away any time soon.

Yet, we must find a way.

The motto of the US Marine Corp is to “Improvise, adapt, and overcome”. These highly-trained, specialised soldiers are those that grace our screens displaying their skills and adaptability in dealing with any and every form of physical, mental or spiritual hardship. Considering how businesses throughout the world have tweaked and modified their operating models to remain relevant, viable, and profitable in this new world, we can draw confidence from the fact that no matter the form the future takes, human ingenuity will likely prevail.

November proved to be a tricky month for us here on the southern tip of Africa. Our local government elections marked the first election in our democracy where the until-now, teflon-like ANC failed to garner more than 50% of the national vote. Barring a handful of metros where they remain dominant, the ANC is firmly being relegated to a rural party, and now occupies the opposition benches in many municipal councils. Given that it is at these levels where the opportunity for rent-extraction is easiest, the once-mighty patronage network of the ANC that kept the proverbial wheels greased is under pressure. Justice Malala recently commented that “a strong ANC and a prosperous South Africa simply cannot co-exist” – the events of November may just mark the time when his words start to ring true.

While the outcomes of the eagerly-awaited prosecutions of corrupt politicians and cadres remain aloof, the sense that we are living in the ‘Republic of No Consequence & Impunity’ does seem to be fading and paving the way to some accountability. And as the governing party gets pushed onto the back-foot politically, and the January 1st deadline for the release of Judge Raymond Zondo’s report fast approaches, it is hard to see this weakened ANC shielding and protecting those implicated from the orange overalls they so richly deserve.

Looking ahead to 2022, it is clear the landscape will most likely continue to shift. Central banks around the world have heralded the end of low interest rates and most have started the unpleasant, but necessary slog of raising rates to normalize monetary policy. Our own SARB last month hiked our Repo by 25bps in an effort to get ahead of the curve and be in a better position to end the upward cycle earlier. Their strategy being to avoid waiting too long before raising rates, and then having to hike more dramatically while playing catch-up with other countries – expect a rate hike in every quarter next year.

And so, with less ‘free money’ to go around and the likelihood of continued variants and high infection numbers, we have a challenge ahead. But rise to it we must. Worldwide, South Africans are regarded as a resilient bunch – maybe now is our time to show it?

As the advisors and managers of your wealth and investments, regardless of the circumstances our task remains the same – navigate the choppy waters of asset and capital markets for you, seek out opportunities for growth, mitigate risk wherever possible, and deliver on the mandates you expect from us. Much like the Marines, our approach will always be a simple one: Improvise. Adapt. And Overcome!

Wishing you and your families a safe and blessed Festive Season and holiday break, and we look forward to engaging with you again January 2022, refreshed, re-energised, and prepared for the year ahead – whatever it may look like.


Steve Crouse

Chief Investment Officer and Senior Advisor