Investments / Economy

Why the rand is more likely to strengthen from its current level

Although the rand briefly dipped below the psychologically significant R15.00/$ level earlier in November, it has largely trended weaker during the month as the local unit takes its cue from the fraught Turkish Lira. Turkey, for its part, has cut interest rates contrary to the current tightening stance being taken by the rest of the globe.

Around the global economy in eight minutes

The US debt and inflation outlook and China’s ongoing policy interventions in its business and financial markets will have a significant impact on global asset class returns in 2022 and beyond. There are, for example, growing concerns that higher inflation in the US will put a damper on equity performances, while China’s recent struggles have led to an 18% decline in China-listed equities over quarter three, 2021. Those tasked with deciding on asset allocations for clients will have to keep a close watch on both local and offshore macroeconomic indicators to structure the optimal investment portfolio.

Goldilocks and the stagflation threat…

The slowdown in fiscal and monetary stimulus in the West, coupled with elevated inflation on the back of supply-chain disruptions and spiralling energy costs, could see investors’ focus shift from cyclical companies towards defensive assets, including gold. “Although equities have soared amid the rebound in economic growth, a period of stagflation could favour more defensive assets such as gold,” writes Sean Markowicz, CFA: Strategist, Research and Analytics at Schroders, in recent commentary by the asset manager.

Research note - November 2021 Local Government Elections