News in South Africa 31st December:
1. Zero tolerance for lockdown rule-breakers:
The country’s security forces stepped up checks in Johannesburg streets on Tuesday evening, under orders to implement what the authorities called a “zero-tolerance approach” to violators.
The restrictions wind back the clock to the early months of the coronavirus pandemic in South Africa.
Announced on Monday by President Cyril Ramaphosa, they include a new ban on alcohol sales, the cause of accidents and violence that strain hospital resources.
The wearing of masks in public space has become mandatory, and potentially punishable by jail.
Bars and restaurants are being ordered to close from 8pm, which is followed an hour later by a 9pm-6am curfew.
Ramaphosa — like other leaders grappling with the pandemic’s second wave — pointed the finger at social events and the holiday period for sapping vigilance.
“We have let down our guard, and unfortunately we are now paying the price,” he said.
Coronavirus has claimed more than 27,500 lives in South Africa, the highest on the continent. The country also became the first to notch up more than a million recorded cases, in a population of 59 million.
“From 9 o’clock, there is no movement allowed,” a policeman stated.
2. Eskom lacking generating capacity:
Eskom on Wednesday said that although the risk of load shedding would be significantly lower from next year, it would never be completely eliminated.
The utility said that it was on track with its planned maintenance programme and was hopeful that it would be completed in September.
“What is needed to eliminate load shedding is new generating capacity. That means new power stations, be it renewable energy or any other form of generation. That is the surest way of ending load shedding because you have to power a growing economy and for that you need capacity,” said Eskom spokesperson Sikonathi Mantshantsha.
3. Petrol and diesel prices to rise:
Fuel prices are expected to rise significantly in January, the Automobile Association (AA) warned on Wednesday.
It expected steep increases across the board, with petrol likely to rise by up to 43 cents a litre, and diesel and illuminating paraffin by 55 cents.
The AA made this prediction based on unaudited month-end fuel price data released by the Central Energy Fund.
“The rand has continued to advance against the US dollar, which is a pleasing outcome considering the severe beating the currency took earlier in the year. But even the currency’s ongoing strength has not been enough to contain oil’s march back towards its pre-Covid-19 price levels,” the AA said in a statement.
International oil prices have stabilised over the past few days, but in the view of the the AA, it is too early to tell whether this is a new plateau or an expected pullback as trading activity declined over the Christmas weekend.
4. Mask refusal – a criminal offense:
Failing to wear a mask in public after a warning from a law enforcement official can now be a criminal offence in South Africa – including, in theory, for children.
Practically speaking, that won’t see either kids or parents go to jail. But shops should kick out anyone who refuses to put in a mask, including infants.
The rules for the newly adjusted Level 3 are clear: all persons entering a public space are required to wear a face mask. Failure to do so can ultimately result in fines ranging from R1,000 to up to six months in prison, or both, plus a criminal record.
And there is no waiver based on age.
But the Child Justice Amendment Act is also clear: people under the age of 12 lack criminal capacity, and so can not ordinarily be arrested or prosecuted through the criminal justice system. Nor, as things stand, can parents be held responsible if, say, a three-year-old yanks off a mask in a shopping centre.
“I don’t think parents will be held liable for failing to mask their children… For that to happen, government would have to issue an amendment. Unless there is an express regulation to explain that a parent can be held criminally liable if they don’t mask their children, I don’t see a successful prosecution,” says attorney Tracey Lomax-Nixon.
While individuals have a responsibility to wear masks, people in charge of public places have a separate duty to prevent entry for anyone without a mask.
“What the regulations say is that shopkeepers may not allow people into the establishment if they are not wearing a mask [and] there’s no age limit on that,” says Lomax-Nixon. “So, shopkeepers are obliged to deny access to families if the children are not wearing masks [and] a shop keeper could be prosecuted if he did allow it, because of the wording of the regulations.”
5. 2020s impact on markets:
2020 will undoubtedly go down in history as the year of the Covid-19 pandemic. The impact on markets has been significant.
What a year it’s been for shares! Following the FTSE/JSE All Share Index’s (JSE) performance for the five-year period ending December 31, 2019, during which it couldn’t even yield 6% pa returns, all hopes were set on 2020 to be the year of recovery. Instead, global markets saw one of the biggest crashes since 2008 when Covid-19 was officially declared a pandemic. By March 19, 2020, the JSE was trading 30% lower than at the beginning of 2020.
From 1987 until now, the JSE has only declined by more than 30% on five occasions. Although it was trading at higher levels on all four prior occasions, the recovery experienced during this correction has by far been the most aggressive. As at the time of writing, the JSE was trading in positive territory for the year.
While offshore shares (MSCI All Country World Index/ ACWI) experienced the same collapse as local markets, they have recovered even faster than the JSE (especially US companies). Many experts feel that the US is currently on the more expensive side. They advise investors to exercise extreme caution, and not base their decisions only on recent returns. After all, the US market traded at similar valuations between 1999 and 2009, and thereafter delivered negative returns for an entire decade.
With basically no interest rates in developed countries and current local money market rates just below 3.5%, cash looks set to deliver negative real growth for investors, if you work according to the International Monetary Fund’s (IMF) expected inflation figure of 3.88% for 2021 (year-end 4.3%). Considering this, cash will have an underweight position in my portfolio in 2021.