31 January 2020 | www.moneymarketing.co.za
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predictions for 2020
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axo Bank stresses that its predictions are not its official market forecasts for 2020, but instead represent a warning of a potential misallocation of risk among investors who see only 1% of these events playing out. Steen Jakobsen, chief economist at Danish investment house Saxo Bank, says, “We see 2020 as a year where at nearly every turn, disruption of the status quo is an overriding theme. The year could represent one big pendulum swing to opposites in politics, monetary and fiscal policy and, not least, the environment.”
The rand One of the outrageous predictions for this year is that the South African rand will sink to 20 against the US dollar due to the country being ‘electrocuted’ by Eskom debt. Kay Van-Petersen, Global Macro Strategist at Saxo Bank, says that South Africa closed out 2019 with both good and bad news. The good news was that the Springboks took home the World Cup trophy. “Their last victory was in 2007, a year that ended with USDZAR below 7, versus 15 now. In carry-adjusted terms, the rand has fallen far less – only
IMAGE: SAXO BANK
Continuing almost two decades of tradition, Danish investment bank Saxo has published its annual Outrageous Predictions for 2020. While these predictions are, admittedly, ‘tongue-in-cheek’ and unlikely to materialise, if they did in fact come true, there would be enormous consequences for investors around the world. And that’s why these ‘Black Swan occurrences’ are worth looking at!
some 6%, though with plenty of volatility along the way. That is a near miraculous feat.” The bad news, Van-Petersen adds, is that the South African government announced late last year that in order to continue to bail out troubled utility Eskom, the budget in 2020
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is projected to balloon to its worst level in over a decade at 6.5% of GDP, “a sharp deterioration after the government managed to stabilise finances at a near constant -4% of GDP for the last few years”. Continued on page 3
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