Late last year we reminded clients of the crazy year we had been through and early this year we highlighted a few local and global topics that could influence the year ahead.
The big event was the ANC elective conference and the election this week of Cyril Ramaphosa as the new State President. This has generated a wave of optimism, perhaps euphoria, that South Africa will now quickly start coming right. Citizens are expecting quick action with State-owned enterprises, tackling of State capture and corruption, economic recovery and job creation.
The Rand, which was suffering under the threat of a downgrade and poor political situation, bounced back against the dollar by more than 18% and is currently at its strongest for 2½ years.
Our stock market, which had gone nowhere for 2½ years, sprang to life in July and showed a better 2017 performance in US$ than the S&P 500, the key index in the buoyant US economy. The local December holiday period showed an amazing 8% growth while SA was sunning on the beach. The recent correction has not dampened spirits.
Steinhoff, one of the largest companies on the JSE, imploded amidst the news of major fraud in the financial results. This in a country that prides itself on top class corporate governance rules.
Globally, we have been in the longest bull market since 1920, currently going through a market correction. Recall that 9 years ago, we suffered the biggest crash since 1929, and many thought it was financial Armageddon.
On balance it is probably true to say that South Africans are all looking forward to a much better world going forward. But wait!
The Minister of Finance must somehow balance the books in his February budget. Tax collections are down and cutting state expenditure will hurt already strained per capita incomes. Someone will have to pay up in the form of higher taxes.
Will President Ramaphosa have the freedom to deliver against expectations, or will he be boxed in by ANC factions?
We still have the downgrade threat over our heads until there are signs that the economic and political situations are repairing.
The global bull market may run out of steam, as developed market interest rates normalise.
So, let the good times roll, but do not throw caution to the wind just yet. Finding a way through the current maze, protecting assets and making money in the process, has not become any easier.
There are many reasons to be feeling better about 2018. Hopefully our new leader is free to capitalise on the massive opportunities awaiting us.