It has been an eventful week to say the least, with Covid-19 was officially named a pandemic. Although taking precautions should be encouraged, panicking and making rash decisions should not. There is potential that the reaction to Covid-19 and the oil trade war could cause a global recession, markets had the worst day on record since the global financial crisis this week, but a bright side to this is that the recession would not be based on a crisis within the banking sector, and so the recovery would most likely be far faster. If you didn’t catch our article covering the market drop-off that occurred this week, please follow the link to it here.
Global News
- The global market had extreme loses on Monday, to only be met with more on Thursday as people reacted to Covid-19 officially being named a pandemic and the oil trade war. No one has escaped the drop-off, Charles O’Shea, the lead retail analyst at Moody’s, said that “there are no winners here. Only degrees of losing.”
- One of the reasons for this drop off was that an alliance between Russia and the international oil cartel, OPEC, fell apart – causing the worst one-day crash in crude oil prices in nearly 30 years. The alliance between the two entities involved restraining oil supplies in order to support prices. When OPEC proposed further production cuts to bolster a market already battered by Covid-19 fears, Russia refused. The industry got another hard blow when Saudi Arabia stepped in and launched a price war with Russia in response to their broken OPEC agreement.
- Both the UK and Australia have launched large fiscal stimulus packages to help reduce the economic effects of the pandemic. While the US announced unprecedented travel restrictions from Europe for 30 days, not including the UK.
- Italy went into lockdown, restricting travel and cancelling events. This was an extreme response to Covid-19 and essentially placed 60 million people under house arrest. At least 7 375 people have contracted the virus in the country, and 366 have passed away from it so far.
- President Putin may be able to run for president again – the lower house of Russia’s parliament approved proposed changes to the constitution which would allow President Putin to run for the office again in 2024 or extend his term as president. The amendments still need to be approved by the constitutional court and a national vote.
Local News
- President Ramaphosa had a win this week when the High Court ruled that the Public Protector’s, Busisiwe Mkhwebane, findings that Ramaphosa had misled lawmakers about a campaign donation was untrue. The Court found that the Public Protector had breached her powers, applied the law incorrectly, and failed to properly assess the evidence.
- The final report by the commission of inquiry has found that Dan Matjila’s (former CEO of the PIC) actions were “wholly improper”. Contravening section 8A(a) of the Financial Advisory and Intermediary Services Act could mean that Matjila may face a monetary fine of up to R1m or imprisonment for up to 10 years.
- Sasol shares dropped another 30% this week, meaning that Sasol stocks have lost almost 95% of their value in the last 11 months. In April last year, Sasol stocks were worth R470.
- According to a new study, 15% of South Africa’s wealth belongs to just 3 500 people, 0.01% of the population. The study shows the extreme inequality present in the country and states that there has been no decrease in wealth inequality in the 26 years since democracy.
