Research Portal

Intellidex Reviews October 2020: in the News


Macroeconomic overview

Globally, markets ebbed and flowed as investors reacted to economic news and political news flow. In the US, UK and Europe, the increase in daily infections reached record levels as the president of the US himself tested positive for the virus.

On a positive note, economic growth in the US rebounded, increasing 33.1% yearly in Q3
(-31.4% in Q2). This was driven by consumer spending which accounts for approximately 70% of its economy. In addition, non-farm employment numbers increased by 661,000 jobs in September after a 1.5 million increase the previous month. However, this was less than expected and points to a slowdown in job creation following continued efforts to open up the superpower economy. Furthermore, this saw the unemployment rate decline to 7.9% in September from 8.4% in August.


Manufacturing and services sectors continued to show signs of improvement globally. Purchasing managers’ index (PMI) data for Europe increased to 53.7 in September from 51.7 in August. However, growth in the region was uneven with most of the increase (around 50%) coming from Germany as export trade increased for a third successful month. Similar data for the UK showed a slight decrease from 55.2 (a two-and-a-half-year high) in August to 54.1 in September.

In the EU, retail sales for August reflected earlier efforts to reopen economies, showing that volumes increased by a better-than-expected 3.7% yearly, after shrinking by 0.1% in July. In addition, monthly retail sales volumes increased 4.4% in August (+1.8% in July), driven by increases in categories such as pharmaceutical and medical goods and textiles, clothing and footwear.


In China, both manufacturing (51.5) and non-manufacturing (55.9) PMI data were stable as economic activity broadly increased, ending eight months of job losses.

China’s Q3 data showed a continuation of its robust recovery, with GDP growth of 4.9% yearly in Q3, up from 3.2% in Q2. Growth came in slightly lower than expected due to a lag in the recovery of the services sector. In addition, industrial production expanded by 6.9% yearly in August, bolstered by an increase in exports. Retail sales in September increased by 3.3% yearly (0.5% in August) and the unemployment rate edged lower from 5.6% in August to 5.4% in September.


The outlook for the rest of Q4 is uncertain and global markets are expected to take their direction from the protracted negotiations around the next stimulus package in the US and an uncertain election outcome. In addition, the downside risks to global growth from the prevailing economic conditions may lead to increased volatility in global markets

South Africa

Locally, Statistics South Africa (Stats SA) reported that 2.2-million jobs were lost in Q2 of this year, with 1.2 million of these jobs lost in the formal sector. In addition, President Cyril Ramaphosa presented an economic reconstruction and recovery plan to parliament, based on four key interventions: accelerating infrastructure development through important projects worth R340bn; increasing energy capacity by 11,800MW by 2022; direct employment stimulus worth R100bn over the next three years; and a reindustrialization drive through boosting local production.

This was followed by the MTBPS by Minister Tito Mboweni in which more bailouts were announced for SAA (R10.5bn) and the Land Bank (R7bn). The Minister also proposed steps to reduce the fiscal deficit with cumulative spending reductions of R300bn over the next three fiscal years. The largest share of reductions is to come from the public sector wage bill, which will prove difficult. In addition, SA’s debt/ GDP ratio is expected to balloon to 81.8% in 2020/21 and peak at 95.3% in 2025/26 before decreasing meaningfully.

The ability of government to implement the reductions and structural reforms needed to improve SA’s fiscal position remains doubtful to say the least, with post-MTBPS comments by ratings agencies increasing the likelihood of more downgrades.

Intellidex Reviews September 2020: in the News

Get these insights first & for free

Background: Exchange-traded funds (ETFs)

Exchange-traded funds (ETFs) are passively managed investment funds that track the performance of a basket of pre-determined assets. They are traded the same way as shares and the main difference is that whereas one share gives exposure to one company, an ETF gives exposure to numerous companies in a single transaction. ETFs can be traded through your broker in the same way as shares, say, on the EasyEquities platform. In addition, they qualify for the tax-free savings account, where both capital and income gains accumulate tax free.

Benefits of ETFs

  • Gain instant exposure to various underlying shares or bonds in one transaction
  • They diversify risk because a single ETF holds various shares
  • They are cost-effective
  • They are liquid – it is usually easy to find a buyer or seller and they trade just like shares
  • High transparency through daily published index constituents

If you thought this blog was interesting, you should also read:


This research report was issued by Intellidex (Pty) Ltd. Intellidex aims to deliver impartial and objective assessments of securities, companies or other subjects. This document is issued for information purposes only and is not an offer to purchase or sell investments or related financial instruments. Individuals should undertake their own analysis and/or seek professional advice based on their specific needs before purchasing or selling investments. The information contained in this report is based on sources that Intellidex believes to be reliable, but Intellidex makes no representations or warranties regarding the completeness, accuracy or reliability of any information, facts, estimates, forecasts or opinions contained in this document. The information, opinions, estimates, assumptions, target prices and forecasts could change at any time without prior notice. Intellidex is under no obligation to inform any recipient of this document of any such changes. Intellidex, its directors, officers, staff, agents or associates shall have no liability for any loss or damage of any nature arising from the use of this document.


The opinions or recommendations contained in this report represent the true views of the analyst(s) responsible for preparing the report. The analyst’s remuneration is not affected by the opinions or recommendations contained in this report, although his/her remuneration may be affected by the overall quality of their research, feedback from clients and the financial performance of Intellidex (Pty) Ltd.

Intellidex staff may hold positions in financial instruments or derivatives thereof which are discussed in this document. Trades by staff are subject to Intellidex’s code of conduct which can be obtained by emailing mail@intellidex.coza.

Intellidex may also have, or be seeking to have, a consulting or other professional relationship with the companies mentioned in this report.