When things are not going well, the media seem to revel in emphasizing bad news and to ignore any titbits of good news. So, just for balance, here is some good news:
- In South Africa the Reserve Bank has cut interest rates by 1%, making debt repayments easier for everybody. Prime rate is now 8,75%.
- In the USA Joe Biden seems to be winning the race for the Democratic presidential nomination against Bernie Sanders. Biden is better for business than Sanders.
- It seems that the number of new cases of Covid-19 has decreased substantially in China and South Korea.
- South Africa is taking drastic measures in an effort to contain the spread of the virus.
- It seems like a cocktail of drugs that have been used for malaria for decades and are therefore already available and safe, called hydroxychloroquine-azythromycin (green line in graph), have been used to treat Covid-19 in France and found to be effective in some instances within only 6 days (see graph below). It is, however, still early days in the hunt for an effective and proven cure.
Advice to consider:
At JWR we are requesting our clients who can, to lower their regular withdrawals from investments , due to the escalating uncertainty regarding the containment and treatment of the virus. We would also recommend that any withdrawals from portfolios should first be made from the cash reserves, and these reserves should be topped up from either the balanced funds or the international unit trusts that perform best to provide a cash buffer of at least 12 months. We have to remember that our international funds are performing much better than our local equity funds due to the balancing effect of a depreciating rand; around 25% year to date. Both the balanced and international equity funds enjoy this rand protection to some extent.
We will monitor the situation carefully and will send more information to all our clients shortly.