COVID-19 and your investment plan

Lloyd Buthelezi, Executive Head: Standard Bank Financial Consultancy

The start of 2020 has seen unprecedented panic and market volatility as a result of the Coronavirus pandemic. South Africa is in a national lockdown which will impact various sectors.

Our economic outlook was not positive prior to the virus, and its arrival will not assist with the economic recovery.

In recognition of this, the South African Reserve Bank took the extraordinary step of cutting lending rates by 200 basis points in the past 2 months and purchased just over R1bn in government bonds in a bid to settle the market.

Government has launched a debt relief fund to assist SMEs affected by COVID-19 and private individuals have also committed billions of Rand to supporting SMEs with the Rupert and Oppenheimer families and the Motsepe Foundation leading the way.

At Standard Bank, we decided to provide SMEs with turnover of less than R20 million, as well as fulltime students with a student loan with us, payment relief from 1 April 2020 till end June 2020.

We have also encouraged our clients who are facing difficult financial times to reach out to us for assistance and to discuss similar payment holidays. 2

What can investors do?
The scope of damage that the virus has wrought has been unprecedented.

For now, and given all the uncertainties, caution is warranted until there is enough evidence that the number of new cases has stabilised and leading economic indicators have turned direction.

It is important that you do not panic, continue making sensible investment decisions and stick to your original long-term plans which would have made provision for normal market fluctuations. Yes, these are exceptional circumstances but staying the course is the best way to ensure you reach your long-term goals.

It also important to seek financial advice. Speak to your financial advisor or broker about what the most appropriate actions you can take so that you are protected in the long-term.

From a personal point of view, it is imperative that you cut back on unnecessary spending or rash investment decisions. Save as much as you possibly can over the next few months to help you bolster your financial situation.

As we navigate the next few weeks, which will no doubt continue to be volatile, stick to your long-term plan, ask the experts for advice and cut back on spending over the short-term to store up your funds. While markets have been dented, they are sure to recover.