Chinese yuan set for best quarter; US stocks rally; mall traffic soars; unemployment

By Claire Badenhorst

• South Africa’s rand strengthened early on Monday after sentiment improved toward emerging markets. According to the Wall Street Journal, the Chinese yuan is all set for its strongest quarter against the dollar since 2008, boosted by optimism over China’s economic outlook and by its comparatively high interest rates. As the world’s second biggest economy, China is used as an indication of the health of emerging market economies because it generates a large chunk of export demand. Profits at China’s industrial firms grew for the fourth straight month in August and a rebound in growth led foreign investors to pump money into both bonds and shares. According to an economist at United Overseas Bank (UOB) in Singapore, things are going back to normal for China which bodes well for investor confidence.
• Meanwhile, the US dollar is expected to remain weak as the country tries to revive its economy with the help of low interest rates and fiscal measures. Increasing the turbulence in the market this month has been investors’ concerns about rising levels of Covid infections, political risks, and continued tensions between Beijing and Washington. Ahead of the first US presidential debate, scheduled for later today, traders are betting on one of the most volatile US election seasons in history, expecting unusually large swings in everything from stocks to currencies. In fact, investors are grabbing a variety of investments that would pay out if volatility extends beyond Election Day itself – the concern being that the outcome of the presidential contest could remain unclear into December.
• Also happening later today, Statistics South Africa will release its unemployment data for the second quarter of 2020. Economists expect that job losses could be close to one million – around 30% to almost 35%, or higher.
• As the country eases into Level 1, activity has certainly picked up in the shopping department. According to Liberty Two Degrees (L2D), the latest weekend footcount across its portfolio of malls was at 80% of 2019 levels. The group, which owns properties like Melrose Arch and the Sandton Convention Centre, says traffic at Sandton City was at 85%, while Midlands Mall came in at 88%, and Eastgate at 97%.