With the rand tanking, jobs vanishing, and local asset prices in the doldrums, many South Africans are looking offshore for investment opportunities. The recent rally in global stock prices – particularly in the US – has made offshore investing even more attractive and South Africa’s own Dr. Doom, Magnus Heystek, strongly advocates taking money out of the country. But before South Africans cash out and go all-in on American stocks, it’s important to ask one key question: Does the US market rally reflect reality, or just hope? In this episode, featuring content from the Bloomberg P&L podcast, we look at whether stock markets are appropriately pricing in signs of economic recovery or whether investors are pushing prices up past the point of good sense. As local investors contemplate the devastation on the JSE, it’s an important question to examine. – Felicity Duncan
The US has begun its reopening – all 50 states have loosened restrictions to some degree and people are back at work and shopping again. Millions of people continue to file for unemployment, but the number of weekly claims is falling and there are definite signs of life throughout the economy.
In response, US stocks have rallied significantly from their Q1 lows. Investors who bought the dip have been celebrating their gains and there are signs of sustained upward momentum in US – and, to a lesser degree, European – stocks.
For South African investors facing a decimated local market and a staggering currency, offshore investing has never looked better. But is now the time to buy? Are market rallies reflecting realistic expectations of a return to normality, or are investors letting hope and optimism get them ahead of themselves?
In this episode, featuring content from the Bloomberg P&L podcast, we explore the optimistic and pessimistic takes on the stock market rally, asking what could go right, and what could go wrong.