The South Africa Market today 08/12/2021

The South African Market today

As the picture becomes clearer on the effect that the Omicron variant has on the response of governments to this new variant. More and more cases are being found in different parts of the world but studies coming out of Southern Africa show that the variant is more infectious but not necessarily more dangerous. The market took this and ran with it with our local market having increased to record levels the JSE all share index traded above 73000 points for the first time ever. Over the years having a look at price action has been one of the tools I have used to identify valuations of the market and our market at the moment would require market participants to tread very carefully in which areas in the market they are taking on risk as many sectors on the JSE are currently at full valuations, so I think it is quite prudent to have active stock selections going into the end of the year.



South African GDP

Lockdown has come to bite our economy coming from a low base due to lockdown last year showed that the growth in the economy was robust, but the previous quarter shows that there was contraction. After recording four consecutive quarters of growth which was led by the mining the commodity prices have softened and this has negatively affected the economy. 6 out of 10 industries showed a declined in nominal GDP growth and I anticipate that this will continue soon as future prospective lockdowns are considered due to the low vaccination rates. I am not a believer in austerity and the new Finance minister Enoch Godongwana has kept the same stance as his predecessors of cutting debt and reducing government spending. I have never seen an economy which has grown with a government which has not been at the for front of growing gross fixed capital. This in the long term does not bode well for local stocks because this will result in continued youth unemployment and socio-economic unrest.