![]() South African Market Update South African equities benefited from the increase in investor risk appetite, with the local equity market delivering strong performance during the month. The strong performance was mostly broad based and was largely driven by the gold miners and Naspers, however, banks continued to underperform the broader market. Local bonds ended the month marginally lower after a very strong April and May, as the worsening fiscal position of the country was highlighted in the supplementary budget delivered towards the end of the month. Local listed property rebounded strongly in the month, recovering some lost ground despite continued concerns around rental collections and balance sheet risks posed by ever increasing loan to value ratios. The rand was largely stronger against most major currencies during the month, showing signs of stabilising following significant depreciation since the beginning of the year. South African Economic Update Finance Minister Tito Mboweni delivered the supplementary budget towards the end of June, providing an update on the state of the country’s finances along with government’s intentions to reduce debt to a more sustainable level. While the content of the supplementary budget was generally well received, it was rather light on specific details, with many commentators highlighting the fact that implementation risk remains relatively high. The Q1 2020 GDP figure was announced during the month, which showed a 2% decline in growth, deepening the recession in SA following two consecutive quarters of negative growth in the second half of 2019. SA headline CPI fell to a year-on-year figure of 3% to the end of April, its lowest level since June 2005, largely driven by lower fuel and transport prices. In positive news, May’s trade balance came in at a surplus of just under R16 billion, as exports dramatically increased by 96% month-on-month, while imports declined by 2% month-on-month. Chart of the month: The recovery in the US equity market since the end of March 2020 has been largely driven by the performance of Facebook, Amazon, Apple, Microsoft and Google: See below for a summary of the key market movements for the month of June:
• The JSE All Share Index (+7.7%) delivered strong performance during the month, supported by strong returns from large index constituents and resources counters. • All local equity sectors delivered strong returns, however, Resources (+8.8%) fared better than both Industrials (+8.3%) and Financials (+4.2%). • Listed property (+13.4%) had its best month in over a decade, largely driven by strong performance from Redefine (+72%) following the company entering discussions to sell part of its business. • Local bonds (-1.2%) ended the month lower, as yields moved higher (moving prices lower) following the announcement of the precarious fiscal position of SA as highlighted in the supplementary budget. • Cash delivered a stable return of +0.4% for the month. • Most major developed equity markets ended the month higher, as investors reacted positively to announcements of fiscal support from global governments and central banks. The MSCI World Index delivered a return of +2.7% for the month. • Emerging market equities were the major beneficiary of the risk on environment, outperforming developed markets over the month. The MSCI Emerging Markets Index delivered a return of +7.4% for the month. • Most major equity markets ended the month with positive returns, with Germany’s FSE DAX (+7.3%), China’s Shanghai SE Composite (+5.7%), Japan’s Nikkei 225 (+1.9%) and the UK’s FTSE 100 (+1.6%) all ending the month higher. • US equities also ended the month higher, with the technology heavy NASDAQ 100 (+6.4%) and the S&P 500 (+2.0%) both ending the month with positive returns. • In terms of the major commodities, Oil (+16.5%) ended the month higher, however, the price of brent crude is still down -37.7% year-to-date. Gold (+2.3%) ended the month higher, while Platinum (-1.3%) ended the month slightly lower. • The rand was slightly stronger against most major developed market currencies for the month. The rand appreciated against the pound sterling (+1.5%), the US dollar (+1.5%) and the euro (+0.5%) during the month. *All data is sourced from Morningstar Direct as at 30/06/2020. The performance of South African asset classes is quoted in rands and the performance of global asset classes is quoted in US dollars. Source: Morningstar
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![]() All South African medical schemes are now regulated to cover the Covid- 19 as a PMB condition. Below is how Momentum & Discovery will cover their members. Discovery Members Members can do 2 tests per Annum Members will follow the below process:
Payment decision on the WHO Global Outbreak Benefit Discovery designed the WHO Global Outbreak Benefit to respond to global health emergencies, such as the COVID-19 virus. What the WHO Global Outbreak Benefit is The WHO Global Outbreak Benefit covers the out-of-hospital management and appropriate supportive treatment of global World Health Organisation (WHO) recognised disease outbreaks and out-of-hospital healthcare services related to COVID-19. This benefit offers cover for the Prescribed Minimum Benefits (PMB) as well as additional cover, and does not affect your day-to-day benefits as long as it meets the Scheme’s benefit entry criteria. Your benefit confirmation Use of the relevant networks as per your chosen health plan will apply for healthcare services paid from the WHO Global Outbreak Benefit. The benefits covered from the WHO Global Outbreak Benefit are outlined below: Healthcare services not covered by the WHO Global Outbreak Benefit will pay from available day-to-day benefits, depending on your Discovery Health Medical Scheme plan.
Momentum members.
![]() In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and SA economy as a whole, which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here? The Covid-19 pandemic has swept the world like a firestorm, resulting in a shell-shocked global economy and frayed social fabric. Just one thing is certain as we look to a future beyond lockdowns: this crisis will bring about lasting structural changes about which we can only guess. We are firm believers in the importance of staying invested through market cycles, even when it feels uncomfortable. Market volatility is one of the few reliable things you can predict in the investment world; you don’t know what prices are going to do next month or next year. All we know is that prices are going to move about, often more than the investment fundamentals and underlying cash flows of the asset classes. Saying that we’re living in volatile times right now is an understatement. In March, the first wave of the pandemic hitting many countries coincided with an oil war between Saudi Arabia and Russia, causing a collapse in the oil price, a global markets liquidity crunch and in SA a ratings downgrade. Together, these caused a sharp contraction in the markets in March, but by April we were already seeing a market recovery. And while many economists are predicting a global recession, it’s important to remember that stock markets are not the economy; the market always looks forward and through the noise. What will the investment sector look like post-pandemic? The immediate impact will be felt by small and medium enterprises (SMEs) operating in the sectors most affected by the lockdown, with resulting unemployment. There will be casualties and business closures, but many companies will survive and emerge stronger as they adapt their businesses to the new world. We will also see new businesses and industries rise as a result of market demands associated with the new world. It is all about adapting to new markets and realities, and doing what is necessary to stay relevant and alive. From an investment perspective, in times of market volatility mispricing occurs, providing investors with opportunities to buy quality businesses at attractive prices. For investors we believe that while the economic environment will be much tougher, we’re going to see an increase in the willingness to save and the importance of having these savings for uncertain times. There will be a shift in the way we spend our income, with a greater awareness of our discretionary spend. This will be a good outcome as South Africans have traditionally been undersaved, and regardless of income most live from month to month. We’re going to see far less comfort in the traditional concept of a job. Many people have had a false sense of security about earning salaries and are permanently employed. This pandemic has shown how quickly that perceived safety net can be whisked away. We are all more vulnerable than we ever imagined. We can expect to see people looking to diversify their income streams to build up their savings pool. The psychological effects on investors will vary and the role of the financial adviser in a post-Covid world will become critical. The big shift we are going to see is a greater focus on the role of the adviser as a behavioural coach and providing holistic financial advice. Their most important role in a post-Covid world will be to help their clients avoid emotional decisions and not overreact during periods of market volatility. They should be steering people away from selling out their investments at the bottom. Helping them stay the course, stay focused on their financial plans and stick to their goals at a time when their income and spending patterns may have changed. One of our concerns is that the psychological effect of the pandemic will put a dent in SA's legendary entrepreneurial spirit. We worry that the lasting scars will make our small business owners and investors more cautious and less willing to take chances and restart. Hopefully our unquenchable optimism will shine through and become a driving force in the broader recovery of the country and its economy. What can investors do to prepare for a world beyond Covid? The most important thing is to realise that the emotional reactions they are experiencing as a result of the pandemic, and its effects on their investments, are perfectly normal. Research has shown that investors feel the pain of losses twice as much as they enjoy the pleasure of gains. A natural reaction to financial loss is fight, flight or freeze, and thus the burning need to do something. But they should not succumb to the urge to act on those emotions. Rather, they should speak to their financial advisers and get back to their original goals, which, for most people is to replicate today’s lifestyle tomorrow. That might even mean seeing this period of upheaval as an opportunity. Our view is that when we have periods of market volatility it is often a time when investors should be adding more to their investments rather than taking them away. Legendary investor Warren Buffett always says he likes his stocks the way he likes his socks: on sale. There’s an old saying in the investment community that you make your money at times like this. You just don't know it at the time. To get advise on investment options with a track record of good returns, please contact Kevin, email: [email protected] tel no: (011 658-1333 Written by: Victoria Reuvers (MD Morningstar) ![]() Don’t panic — we’re all in this pandemic together, you just need to plan Coping with a pay cut is as much about managing your emotions as it is about managing your money. You have to get over the anger, hopelessness or denial and get planning. Here’s what you need to do. 1. Rework your budget. A budget is a plan for your money, and if you don’t have one, you have no control over your finances. If you’ve never budgeted, now is the time to start. Your budget doesn’t have to be complicated. In fact, the simpler the better. Begin by listing all your expenses, starting with your fixed expenses, such as your home loan or rent; rates; car repayments; life and other short-term insurance premiums; school fees; and all debit orders for expenses such as a cellphone contracts and any credit agreements, including credit cards. Now list all variable expenses, such as food, electricity and transport costs. A budget balances what you spend against what you earn. If you’re spending more than you earn, you’re living on credit, which is a road to financial ruin. You have to cut your expenses so that you’re living within your means. John Manyike, head of financial education at Old Mutual, says times such as these call for boldness. “You may need to downgrade your car or your house or move your kids from private to public schools,” he says. Be discipled when discriminating between needs and wants, says Dhashni Naidoo, manager of consumer education at FNB. “Needs are for survival and the rest are wants. Reduce your spend on non-essential items such as cellphone costs.” With most of us still under the lockdown, we aren’t spending on eating out, travelling to and from work, or ferrying children to and from school and extramural activities. For many people, cutting these expenses has led to a substantial saving. The same applies to any other regular expenses that may have fallen away, such as a gym membership that has been frozen. Tally up all you’re saving, no matter how small the saving may be, because this can soften the blow of loss of income. Many people who have taken a pay cut have cut back on their school fees accordingly. So, if you’ve taken a 30% pay cut, consider paying 30% less on your school fees for now. 2. Take a payment holiday. If your pay cut is temporary and any of your creditors are offering you a payment holiday, consider taking it. A payment holiday is typically an extension of the term of your credit agreement by three months. It can have the effect of freezing your account for a period, giving you a break from paying for three months, providing you with some relief. Naidoo says that when exercising this option, make sure you understand exactly what the long-term cost implications are. Payment holidays are typically only offered to customers who are up to date on their payments, but some banks are offering them to those who were no more than two months in arrears before February. If you weren’t too far in arrears, make a proposal to your bank, showing that you’re living frugally and are serious about paying as much as you can as soon as you can. If you show goodwill to your creditors, they are more likely to extend goodwill to you. 3. Negotiate with your creditors and insurers. Never just stop making payments. A credit agreement is a contract and failing to pay has consequences from an impaired credit report to judgment being taken against you. A life policy is a contract, too. Both Naidoo and Manyike say that rather than cancelling insurance policies, review your cover and reduce it where possible, so that your premiums are reduced. “You still need life cover for the benefit of your dependents. Your risks are still there. So speak to your financial adviser to find out if your policy comes with premium waivers or if there are features that you can do without,” Manyike advises. 4. Negotiate with your family. Getting the buy-in of your family is crucial when you, as the breadwinner or a contributing member of the family, suffer a pay cut. It is most likely that everyone will have to make sacrifices so the new household budget works. Speaking candidly to the family about money is necessary so that everyone understands the impact of your pay cut, and so that everyone’s expectations are managed. This is especially important if you’re helping support members of your extended family. “Remember, you can’t give what you don’t have,” says Manyike. 5. Try not to lose perspective. As hopeless as things may seem, don’t forget that this will pass. It’s perfectly normal to feel discouraged, but don’t allow yourself to “camp” there. You’re not alone. For now, we all have to get used to living with uncertainty, which means living one day at a time. Try to be upbeat. It’s necessary for your mental health and that of your family. “Our emotional well-being is being tested severely at this time,” says Manyike, adding that everyone needs support they can draw on, whether through spiritual beliefs or family. Also, he says, don’t neglect your hobbies, especially if you could make money out of them. Source: Business Day Global markets continued to climb higher in May following a strong rebound in April, as investors reacted positively to the news of many economies reopening following the Covid-19 induced lockdowns. The positive performance generated by most global equity markets came despite concerns around a possible second wave of infections and political tensions between the US and China, initially around Covid-19 and later around Beijing’s treatment of Hong Kong. Economic data continues to show signs of the damage caused by the Covid-19 pandemic, with forecasts indicating that the US economy lost another 8.3 million jobs in May, following the 20.5 million lost in April. This would push the US unemployment rate to close to 20%, after it ended April at a level of 14.7%. South African equities ended the month largely flat, however, there was significant dispersion among the index constituents during the month. Platinum group metals counters (PGM’s) and diversified miners delivered strong performance during the month, however, this was offset by continued weakness in banking and financial counters. Local bonds were the standout performer during the month in terms of local asset classes. Yields continued to fall dramatically during May (moving prices higher), as the asset class delivered its best monthly performance since July 2008. Local listed property continued to struggle during the month as the benefit of lower interest rates appeared to be offset by tenants struggling to deliver on contractual rental obligations. The rand was significantly stronger against most major developed market currencies during the month, recovering some lost ground following significant depreciation since the start of the year. The Governor of the South African Reserve Bank (SARB), Lesetja Kganyago, announced another reduction in the repo rate of 50 basis points during May, bringing the rate to a record low of 3.75%. President Cyril Ramaphosa announced the re-opening of some sectors of the economy under Level 4 lockdown restrictions and also announced that the country will move to Level 3 from the 1 st of June, which will allow many businesses to return to full operation. Local equity sector performance was mixed, with Resources (+5.6%) delivering strong performance, while Industrials (-1.8%) and Financials (-3.2%) fared slightly worse. Most major developed equity markets ended the month higher, as investors welcomed the reopening of many global economies post the lockdowns in countries around the world. The MSCI World Index delivered a return of +4.9% for the month. Emerging market equities managed to deliver positive performance for the month, however, returns were slightly more muted than those in developed equity markets. The MSCI Emerging Markets Index delivered a return of +0.8% for the month. Most major equity markets ended the month with strong returns, with Germany’s FSE DAX (+8.3%), Japan’s Nikkei 225 (+7.5%) and the UK’s FTSE 100 (+1.3%) ending the month higher. China’s Shanghai SE Composite (-1.6%) bucked the global trend, ending the month lower. US equities also ended the month higher, with both the NASDAQ 100 (+6.3%) and the S&P 500 (+4.8%) both delivering strong returns. Impact on client portfolios
Most portfolios ended May with positive returns, largely driven by strong performance from the SA bond market as well as continued strength in global equity markets. Rand strength during the month against major developed market currencies did detract slightly from the positive contribution from global exposures. Income focused investors received decent returns from portfolios during the month, as local bond allocations drove positive performance during May. What is apparent is that despite global economic data showing strain from the impact of the global lockdowns, markets appear to be reacting positively to the gradual opening of industries across the world. The significant amount of monetary and fiscal stimulus announced by governments and central banks has also provided significant support to global markets. We will continue to follow a disciplined valuation driven approach in managing client portfolios, with risk management currently more important than ever given the noisy market environment. Click here to download market performance ![]() In South Africa, having a car is a necessity which at the same time brings the risk of a motor accident. And let’s face it – motor accident is the last thing on our mind, hence when we encounter it, we often do not know what to do. The purpose of this article is to share some info on the topic, so that you are better prepared in the event of a motor accident. First and foremost, it is imperative that you remain calm and put safety first. Many people often get out of the car immediately in order to check for damages (or in some cases, argue with the other party), without first checking surroundings. This is very dangerous, particularly on a highway or major roads, hence this must be remembered. If you feel unwell after the incident, limit your movement and wait for paramedics to arrive on the scene. Secondly, you should not admit any liability. This is an accident which no one wanted to happen, so leave the liability matter to the insurer who will represent you in the case. Furthermore, record as much evidence as possible. Fortunately, these days we all have a cell phone, so you can take pictures and record key information such as:
So what should you call the police? If there are no injuries or major blockage of the road, then you don’t have to call the police – you can register the case at the nearest police station within 24 hours. If there are injuries, then the cars can only be moved after police arrives on the scene and takes proper record. In terms of towing, if the car remains drivable, then no towing service is needed. However, if you are worried that driving it may cause further damage (or the car is not drivable at all), then we suggest that you contact your insurer to arrange towing and storage by their appointed service provider to avoid any potential issues. If needed, the police has the right to tow the car for further investigation. Last but not least, remember to inform your insurance advisor after the incident and provide true and accurate information, so that the claim can be processed without delay. If you have any short-term insurance needs, you can contact us on the following channels:
![]() Benefits can become complicated. For your own good, here’s what you should know. Medical schemes undertake liability in return for a premium or contribution. They are required to help their members in obtaining healthcare services and defraying expenditure for such services. The benefits that a scheme may grant must be registered in its rules. Schemes typically cover the following healthcare services:
Common tariff structures
Private health insurance allows people to protect themselves from the potentially extreme costs of medical care if they become ill. It also gives people access to healthcare when they need it. The exclusion list of scheme options (Annexure C of scheme rules) deals with limitations of entitlements. Schemes must ensure that there is good reason for these exclusions and limitations, and that they are not too broadly worded. Otherwise, they may lead to arbitrary or unreasonable denial of care. But why exclusions and limitations? Entitlements in any option are discretionary (optional) or non-discretionary (compulsory). The latter are covered by the prescribed minimum benefits (PMBs). The Regulations in the Medical Schemes Act 131 of 1998 deal with the entitlement to PMBs: they must be paid in full under certain circumstances, such as when the member obtained the service from a designated service provider. The standard of care (and entitlement to it) is determined by protocols based on the principles of evidence-based medicine or, where these do not exist, the protocols of the public sector. Non-PMB conditions and entitlements are dealt with in scheme rules, and limitations and exclusions are applicable to them. Exclusions The following principles should be considered when deciding whether an exclusion is justified or not: best practice, evidence-based healthcare, clinical protocol, cost-effectiveness (affordability), and the laws of the country.Conditions or circumstances that should definitely not be excluded are those that are medically necessary, with little discretion from the member and/or service provider. Put differently, consider whether urgent treatment is needed to prevent death or permanent disability, and whether the attending doctor has some discretion as to the timing of treatment, and whether the treatment should be given at all. It would, for example, be entirely inappropriate to include an exclusion for the treatment of acute appendicitis, whereas an exclusion for cosmetic surgery in the absence of clinical indications would be appropriate. Not forgetting affordability, clinical protocols based on evidence-based medicine should be the bottom line when deciding whether funding is justified or not. Fair exclusion? You decide. Limitations on cover are appropriate where they permit a degree of financial risk management. But they are inappropriate where their application allows for the selective targeting of specific people or vulnerable risk groups. Thus, reasonable financial management should be permitted, but not to the extent that it allows risk selection and unfair discrimination. Limitations should be permitted where they achieve the following:
Limitations are inappropriate where they achieve the following:
Source: Medicalaide.co.za |
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