As at the time of writing, the S&P 500 is headed to its fourth-straight weekly advance, with technology companies amongst the leaders in the benchmark’s gains. It is common knowledge that major technology companies have been a beneficiary of the acceleration to digitalisation caused by business and consumer responses to Covid-19. But on Wednesday, Apple Inc. made history when its stock pushed past a market value of over $2 trillion, making it the most valuable listed company in the world. It took 42 years for the company to reach $1 trillion in value, and then only two more years to get to $2 trillion. To place this into context, the market capitalisation of Apple is significantly greater than the Gross Domestic Product (GDP) of South Africa, which was worth $351.43bn in 2019, according to official data from the World Bank.
- The Senate Intelligence Committee has released new information on how Russia interfered in the 2016 Presidential election. The report shows that President Trump welcomed the rival’s assistance and gives new information on Russian officials and President Trump’s associates during and after the campaign.
- President Trump’s associate, Steve Bannon, has been arrested. Bannon has been accused of defrauding Americans out of an estimated $25 million. This money was meant to be used for Trump’s wall; it is alleged that Bannon funnelled these funds for his personal use.
- Anti-corruption campaigner and President Putin’s most prominent opponent, Alexei Navalny, has been poisoned and is in intensive care. Russian security services have said they are not investigating the attack. This is the latest in a series of suspected murders and attempted murders by poisoning of Putin’s opponents and others who have fallen out of favour with the Kremlin.
- The S&P 500 and the Nasdaq Index both reached record highs this week. Speculation remains over whether this rally is a recovery, or if markets will stumble to realign market gains with earnings forecasts. This is in the midst of the potential minefield of the US election; US stimulus negotiations faltering; Covid-19 continuing to spread; US/China trade war rehashing; and lingering Brexit finalisation.
- Tensions between China and the US continued to escalate this week. The US introduced new restrictions on the Chinese company Huawei Technologies Co., aimed at limiting the company’s access to chips which will likely impact its 5G base stations and smartphone business.
- What if “Herd Immunity” is closer than scientists thought? According to a New York Times article published on the 17 August, “To achieve so-called herd immunity – the point at which the virus can no longer spread widely because there are not enough vulnerable humans – scientists have suggested that perhaps 70 percent of a given population must be immune, through vaccination or because they survived the infection. Now some researchers are wrestling with a hopeful possibility. In interviews with The New York Times, more than a dozen scientists said that the threshold is likely to be much lower: just 50 percent, perhaps even less. If that’s true, then it may be possible to turn back the coronavirus more quickly than once thought.”
- Dealing with the Scourge of Corruption – Progress or Regression? A stimulus package of R500bn announced in April was meant to supplement an existing social safety net that already supported 11.3 million citizens with monthly assistance for food and other social services. Yet food parcels have gone missing, contracts have been doled out to the politically connected, and funds meant for unemployment insurance have made their way to the pockets of political cronies. Yet another scourge this week was the announcement that corruption-tainted Zandile Gumede, former eThekwini Mayor, was sworn in as a member of KZN’s provincial legislature. Gumede, along with other colleagues and service providers, stands accused of corruption for her alleged role in the handling of waste-related contracts worth R430m. On the other hand – and with acknowledgement that new incidents of corruption and political mismanagement emerge almost on a daily basis –independent political and economic analyst JP Landman looks at the scoreboard of what the state, under the leadership of President Ramaphosa, has achieved so far in fighting corruption. Landman concludes that the President has clearly placed the state on a new trajectory in this battle, but it is most important that the ANC now follows suit. Follow this link for Landman’s detailed analysis.
- In addition to SA’s national debt, the financial plight of municipalities is our next problem: South African towns and cities are facing increasing debt from local authorities being unable to collect payment for rates and services from residents and households who are unable or unwilling to pay. National Treasury reported this week that debt owed to municipalities has risen to R191.5 billion by the end of the financial year through June 30. If debt older than 90 days were excluded, “the actual realistically collectable amount is estimated at R33.4 billion,” the Treasury said.
- Marianne Merten from the Daily Maverick has written an article analysing the Government’s post-Covid-19 reconstruction & recovery plan. She reveals that the plan includes little detail, no indication of a time frame, and exposes the ANC’s factional paralysis and lack of capacity.
- A second Covid-19 vaccine trial could be underway in South Africa by September. Novavax should be heading into its final stage of testing by September, and a third vaccine could head to trials by the end of the year. Dr Madhi, a vaccinology professor at the University of the Witwatersrand, said South Africans would have early access to the vaccine if approved.
- Standard Bank’s earnings take a hit: Following similar, recent announcements by Absa and Capitec, Standard Bank has reported that it too is expecting its revenue to decline in the second half of 2020 due to the impact of Covid-19 and the subsequent lockdown. The first half of the year saw earnings for the Bank fall 44%. SA Reserve Bank Governor Lesetja Kganyago has said that the banking system is well capitalised, but that the Reserve Bank is ready to pump funds into the sector should this be necessary.
- Experian Data Breach: As reported in the media on Wednesday 19 August, Experian – a consumer, business and credit information services agency – experienced a breach of data, which impacted various financial institutions and their customers. We wish to assure our Investec CCM clients that the breach originated outside of Investec; that Investec does not share clients’ data with Experian; and that therefore none of our clients’ information has been compromised through our administration arrangement with Investec.
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc