The SA Daily
31 March 2020
Stimulus still no effect
- Global equity indices have been battered by the coronavirus pandemic, a steep global demand slowdown, and depressed profits. Since January 2020, by yesterday the Developed Market Equity Index had shed 20.7% and the Emerging Market Equity Index 21.3%.
- The JSE All Share Index (JALSH) is down a similar 23.9% since January. It had peaked at 59,002 pts by 17 January 2020, then plummeted to 37,963 pts by 19 March 2020. It’s since been gaining, though, to 43,414 by yesterday. Non-residents have been net sellers of SA equities to the tune of R30.12bn since January and net sellers of bonds to the value of R49.96bn.
- The US Fed has already cut interest rates by a cumulative 150 bps this year at two separate emergency meetings, and unlocked US$700bn of asset purchases. The ECB has added a cumulative €870bn to its existing asset-purchase program of €20bn a month. The BoE cut interest rates by a cumulative 65 bps in two emergency meetings and announced £200bn of bond purchases. The Bank of Canada has cut rates by a cumulative150 bps and will begin C$5bn per week purchases of government securities across the yield curve. The SARB has already cut rates by 125 bps since January and will be buying government securities in the secondary market.
- The pandemic has spurred unprecedented global monetary and fiscal stimulus — but thus far markets have not been inspired amid the continued global lockdown and investor concerns about an unavoidable global growth downturn.
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