News in South Africa 30th December:
1. Double J&J cuts Omicron hospital stays:
Two doses of Johnson & Johnson’s Covid-19 vaccine slashed hospitalisations caused by the omicron variant in South Africa by up to 85%, a critical finding since the shot is being increasingly relied upon across the continent, researchers said.
The results are a welcome bit of news as the explosive rise of omicron pushes the world to a record number of daily cases, and evidence emerges that the highly mutated strain can evade the protection that normally stems from antibodies produced in response to vaccination. They also could help explain why hospitalisations and deaths aren’t following the exponential growth in new cases.
The study from the South African Medical Research Council found that protection levels rose in the weeks and months after a booster dose was given to those who previously received the J&J vaccine.
It prevented 85% of hospitalisations one to two months after the second shot was given, up from 63% for people who received the booster within the past two weeks.
The researchers tracked hospitalisations that occurred from November 8 through December 17 in South Africa, when omicron quickly became the dominant strain circulating there. They compared the records of 69 092 health care workers who got the J&J vaccine to unvaccinated individuals who were enrolled in the same managed care organization.
The results are the first evidence that a second dose of the J&J shot given six to nine months after an initial injection is effective against severe infection caused by omicron, the investigators said in the study, posted on medRxiv.org.
2. Hospitality sector calls for curfew lift:
With 2022 around the corner, there have been renewed calls for government to lift the COVID-19 lockdown curfew.
Earlier this week, the Democratic Alliance (DA) called on President Cyril Ramaphosa to end the curfew before New Year’s Eve.
South Africa remains on lockdown alert level 1, with the curfew from midnight to 4am in the morning.
And the restaurant industry of South Africa, along with lobby groups and the hospitality industry, is backing this call.
The industry’s CEO Wendy Alberts: “The reason for lockdown is that it was to adequately prepare the healthcare system and the necessary beds. What we do know is that there’s absolutely no evidence that curfew prevents the spread of the virus or no scientific evidence to say that by lifting the curfew there’ll be an influx of infections.”
Alberts said that further economic devastation could not be allowed as many restaurants had already suffered.
She’s therefore appealing to the president to listen to their plea ahead of New Year’s Eve.
“We are absolutely in support of lifting the curfew for New Year’s Eve. We certainly believe that South Africa needs to be free and celebrate New Year’s Eve with friends and family in a controlled safe environment. We certainly hope that we will be able to enjoy the celebration this year.”
3. US Omicron wave could peak by end-January:
White House chief medical adviser Dr Anthony Fauci said the latest wave of the Covid-19 pandemic in the US could peak by the end of next month.
“It certainly peaked pretty quickly in South Africa,” Fauci told CNBC’s “Closing Bell” on Wednesday, referring to the Omicron variant of the coronavirus, which was first reported in the country at the end of November. “It went up almost vertically and turned around very quickly,” he said.
The Omicron variant has become the most common coronavirus variant in the US.
Considering the size of the US and the country’s levels of vaccination — around 62% — the peak “likely will be more than a couple of weeks, probably by the end of January, I would think,” Fauci told CNBC.
A recent University of Texas report estimated that US Omicron cases could peak between January 18 and February 3, while daily Covid-19 cases could bottom out in March — even as Omicron remained widespread.
Regarding a theory that the Omicron variant could accelerate the end of the pandemic, Fauci told CNBC that while the scenario is possible, there’s “no guarantee” it would happen.
“But if you have a very transmissible virus that replaces another virus, and that virus has less of a degree of severity, that would be a positive outcome,” he said.
4. Food prices rising:
The latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that food prices increased slightly in December 2021, following a small drop in prices in November.
The civil society initiative’s data showed that year-on-year, however, basket prices have increased by 6.8%, outstripping headline inflation.
The group’s food basket totalled R4,275.94 in December, up R3.50 (0.01%) from R4,272.44 in November – pointing to relatively flat prices over the last month. However, the same basket in December 2020 was R4,002.42, meaning households are paying R273.52 more (6.8%) than a year ago.
Statistics South Africa’s latest Consumer Price Index for October 2021 shows that headline inflation is 5%, and for the lowest expenditure quintiles 1-3, it is 6.5%, 6%, and 5.2% respectively. CPI Food inflation is 6.7%. The Producer Price Index for October 2021 shows that agricultural inflation was 8.7%.
The key point of contention around inflation figures is that salaries and wages are negotiated around headline inflation. The national minimum wage is often only increased by headline CPI, and social grants have more recently been raised at rates far lower than CPI.
Food prices December 2020 to December 2021 – big changes
Year on year changes are more significant, the group’s data shows, with the same basket costing 6.8% more – higher than headline inflation.
Consumers are paying more almost across the board, with only eight of 44 items coming down in price, and only one significantly (above 10%). On the opposite end, 35 food items went up in price, 26 of which were above headline inflation.
These are the most significant changes, above 10%:
- Cooking oil: +30%
- Gizzards: +31%
- Beef liver: +30%
- Chicken livers: +22%
- Beef: +17%
- Sugar beans: +17%
- Spinach: +15%
- Fish: +14%
- Apples: +13%
- Frozen chicken portions: +12%
- Eggs: +11%
- Wors: +11%
- Margarine: +11%
- Samp: +10%
- Canned beans: +10%
- Oranges: -31%
Regionally, the difference in cost of the total household food basket in Joburg, Durban and Cape Town is consistent at around ±R150. Springbok and Pietermaritzburg tend to be outliers in the data (Springbok being highest, and Pietermaritzburg being lowest).
5. Major investment trends:
The Covid-19 pandemic has accelerated significant changes in existing global investment trends, some of which will either change or recede as normality returns with more being vaccinated. However, some trends are here to stay.
Key trends impacting investors are highlighted below by various commentators.
Janina Slawski, head of investing consulting at Alexander Forbes, highlights key trends impacting investors:
Responsible investing
Flows to ESG funds have been significant across both active and passive funds. The European Union’s Sustainable Finance Disclosure Regulation (SFDR) came into effect on March 10, 2021 and is driving significant flows into ESG-labelled funds. The directive falls under the European Union’s and United Nation’s 2030 Agenda for Sustainable Development. It aims to:
- drive €1 trillion into green investments over the next decade
- address the lack of consistency in the climate-related information currently provided by financial-market participants
- provide a competitive edge to those firms offering genuinely sustainable products.
SFRD has driven a rush by investment firms to label products as “sustainable” as they seek to gain a share of the booming market that hit a record $2.3-trillion in the second quarter of 2021.
Passive investing
Passive vehicles’ lead will likely expand in the $11.6 trillion US domestic equity fund market. Passive investing overtook active investing around August 2018; its current market share stands at about 54%. At least 42% of non-domestic assets are passive. The $6.2 trillion in passive assets still accounts for less than a sixth of the US stock market, with its market cap of about $40.4 trillion.
Cryptocurrencies vs gold
The world has seen a vast expansion in money supply since gold standards were abandoned. Cryptocurrencies have a market cap of about the same size as the market cap of US small cap stocks as represented by the Russell 2000 index. Bitcoin is predominant among crypto assets and offers some acceptance as a digital “store of value” or “digital gold”. There is no central authority to tamper with supply, and Bitcoin should therefore benefit when authorities print more traditional money.
Investing after the Covid-19 pandemic
As the global vaccine roll-out continues, we are moving into a new world and the impacts of change are global, says Slawski. She holds the following views about investing after the pandemic:
- Markets moving sideways
The economic recovery is looking entrenched, but markets could easily start moving sideways. Although the massive stimulus is still keeping economies buoyant, higher inflation and rising bond yields seem likely. The 2020 surge in savings is unlikely to continue and the pandemic’s end is already priced in to record high valuations.
Several factors are threatening to revive inflation. Whether current inflationary pressures are permanent or transitory is debated extensively.
- Easy money will dry up
Central banks are expected to tighten again, starting with reduced bond buying.
- A post-dollar world
Whilst the dollar is still the undisputed reserve currency, cryptocurrencies are emerging as a potential medium of exchange.
- Commodities
Commodity prices have declined steadily in real terms since records begin in the 1850s. However, that long decline is punctuated by boom decades. Although there was great excitement about the strong returns in 2020, it is questioned whether this will continue.
- An emerging market comeback, driven by:
– any continued revival in commodity prices
– growth among a few select emerging countries (concentrated in Eastern Europe and Southeast Asia) that are still growing on the back of export manufacturing
– market-friendly economic reforms
– the adoption of internet technology after the Covid-19 pandemic
- Rising challengers
E-commerce giants have made huge gains in recent years, but the market capitalisation of smaller, popular rivals is showing faster growth.
All information sourced from articles posted by: Fin24, EWN, Business Insider, BusinessTech, and Moneyweb.
