Another year of surprises

12 December 2022 Old Mutual Wealth Investment Strategist Izak Odendaal

Right up to the quarter final stage, the 2022 FIFA World Cup in Qatar has delivered more upsets and unexpected results than most previous editions.

This is fitting, perhaps, for a year that was full of surprises. As we look back on 2022 in our final note for the year, we highlight a few of these surprises and the lessons they’ve taught us.

Long Covid
Getting ready for a hot, sweaty and crowded South African summer holiday, Covid feels like a distant memory to many. It is not. It wasn’t that long ago that carrying a mask and vaccination certificates was de rigueur. This is still the case in China.

From the outside, China’s strict approach to Covid has been unexpected, but the country has suffered very few Covid-related deaths compared to other countries and it makes perfect sense that they would want to keep it that way. The bigger mystery is why they did not do a better job of vaccinating vulnerable groups.

The harsh lockdowns have taken an economic and psychological toll. A tipping was reached in recent weeks and widespread protests broke out, something very few thought could happen in such an authoritarian state. Even more unexpected is that they seem to have worked.

Beijing is softening, though not abandoning, Covid containment rules. While a return to normality is likely to be a gradual process, it does raise the prospect of a reopening bounce for the Chinese economy, which would be handy at a time when the rest of the world slows down. However, as in the West, the pandemic is likely to have a lasting economic impact. While the Chinese people will be understandably happy for life to return to normal, this does not necessarily imply a spending spree. The whole experience might make many more cautious about the future, also bearing in mind that the key property sector remains under considerable pressure while youth unemployment has risen to alarming levels. A survey of depositors by the People’s Bank of China, the central bank, shows that preferences for more saving has increased, with a corresponding decline in preference for more spending.

Click here to read more...