THE DAILY BRIEF MARKETUPDATE TUESDAY,13OCTOBER2020 GLOBAL MARKETS - CAPRICORN ASSET MANAGEMENT

The Daily Brief

Market Update                                         Tuesday, 13 October 2020

Global Markets
Asian shares slipped on Tuesday, brushing off a firmer Wall Street lead as China's post-holiday rally
cooled, although a buoyant tech sector and fresh optimism about U.S. stimulus are expected to
continue to support sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped into negative territory in the Asian
session, down 0.09%. Weakness emerged early in China as the Shanghai Composite slipped 0.5%,
trimming gains made in the two trading days since a week-long public holiday last week. China's
CSI300 shed 0.3%. The morning session of Hong Kong's Hang Seng index was cancelled as the city
faced a typhoon warning. In Japan, the Nikkei index was off 0.2%.

Despite the volatility across the region on Tuesday, Surich Asset Management founder Simon Yuen
said he was confident Asian stock markets would retain positive fundamentals following the U.S
election on Nov 3. "We expect Asian equities should outperform the global equity market in next
two to three years because if (Joe) Biden is elected U.S. shall have an easier relationship with China,"
Yuen said. "On the other hand, if (Donald) Trump is elected, China will promote demand in terms of
consumer spending in order to increase their dominance over the world."

Australian S&P/ASX 200 was the region's only bright spot, up 1% on firmer bank stocks and despite a
selldown in major coal names after reports China could look to ban Australian imports of the
commodity. On Wall Street, the Nasdaq Composite on Monday staged its biggest one-day rally in a
month, jumping 2.56%. The Dow Jones Industrial Average rose 0.88% and the S&P 500 gained 1.64%.

The U.S. dollar was pinned near a three-week low and gold, another safe-haven asset, stayed below
a three-week high, slapped by investor demand for risk. The dollar index gained 0.15%, reversing an
earlier fall in the U.S. session. Wall Street gains on Monday were driven by Apple Inc, which surged
6.4% ahead of an expected debut of its latest iPhone on Tuesday, while Amazon rallied 4.8% ahead
of its Prime Day shopping event this week.

Investors now await U.S. bank results with JPMorgan and Citigroup kicking off third-quarter earnings
season on Tuesday. Goldman Sachs, Bank of America, Wells Fargo and Morgan Stanley report later
in the week. Bets that more U.S. stimulus was in the offing came despite signs that talks in
Washington had stalled again, leading the Trump administration to call on Congress to pass a less
ambitious coronavirus relief bill. U.S. Senate Republicans said they will go along with what President
Trump wants in coronavirus relief legislation, a White House spokeswoman said on Monday.

Beijing's tensions with Washington are also in view after the White House moved forward with three
sales of advanced weaponry to Taiwan, sources familiar with the situation said on Monday. The
move in the run-up to the U.S. election is likely to anger China, which considers Taiwan a renegade
province. Investors are also closely watching the global resurgence in coronavirus cases after British
Prime Minister Boris Johnson on Monday announced a new system of restrictions on parts of
England. Lawmakers will vote on the move on Tuesday.

Gold was 0.35% weaker to $1,915.36 an ounce. In energy markets, oil prices slipped after a force
majeure at Libya's largest oilfield lifted, a Norwegian strike affecting production ended and U.S.
producers began restoring output after Hurricane Delta. In Asian trade, Brent crude was 0.05%
higher at $41.71 a barrel. U.S. West Texas Intermediate climbed by the same amount to reach
$39.41.

Domestic Markets
South Africa's rand firmed slightly on Monday, clinging to the previous week's gains spurred by
hopes for the conclusion a stimulus package in the United States.

At 1500 GMT the rand was 0.14% firmer at 16.4750 per dollar compared to an close of 16.4975 on
Friday in New York.

The expectations of stimulus in the world's largest economy have provided a welcome boost for the
rand by weakening the dollar and boosting appetite for risk-sensitive currencies.

Traders, however, warned that the cheer was thinning. On Friday, President Donald Trump offered a
$1.8 trillion coronavirus relief package in talks with House Speaker Nancy Pelosi - moving closer to
Pelosi's $2.2 trillion proposal. A holiday in the United States kept volumes thin and traders cautious
of any big bets.

Locally, anticipation ahead of Thursday's address in parliament by President Cyril Ramaphosa, in
which he has promised to outline the government's economic recovery plan, has also kept trading
on the cautious side. Treasury is set to publish its medium term budget (MTBPS) in two weeks’ time.

"The rand continues to average around R16.50/$ this quarter, in line with our forecasts, and will be
subject to volatility, with risks around the MTBPS, Moody’s, S&P and Fitch country reviews and
global financial market sentiment," said Annabel Bishop of Investec.

Bonds firmed, with the yield on the benchmark 2030 paper down 6 basis points to 9.435%.

In the equities market, the Johannesburg All Shares index closed 0.67% firmer at 55,552 points while
the Top-40 index climbed 0.74% to 51,158 points. Leading the gainers was troubled retailer
Steinhoff, which continued to rise after it said on Friday discussions about a $1 billion settlement
with various litigants are progressing and is requesting consent support from its financial
creditors. Shares in Steinhoff jumped 36% to 1 rand, a level last seen on Aug. 3. Construction firm
Murray & Roberts' share price rose 7.26% after the group announced that its Australian company's
joint venture was awarded a large energy contract.

Source: Thomson Reuters

Corona Tracker

Market Overview

Notes to the table:
    The money market rates are TB rates
    “BMK” = Benchmark
    “NCPI” = Namibian inflation rate
    “Difference” = change in basis points
    Current spot = value at the time of writing
    NSX is a Bloomberg calculated Index

Important Note:
This is not a solicitation to trade and CAM will not necessarily trade at the yields and/or prices
quoted above. The information is sourced from the data vendor as indicated. The levels of and
changes in the yields need to be interpreted with caution due to the illiquid nature of the domestic
bond market.

                                                                                 Source: Bloomberg

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The information contained in this note is the property of Capricorn Asset Management (CAM). The
information contained herein has been obtained from sources which and persons whom the writer
believe to be reliable but is not guaranteed for accuracy, completeness or otherwise. Opinions and
estimates constitute the writer’s judgement as of the date of this material and are subject to change
without notice. This note is provided for informational purposes only and may not be reproduced in
any way without the explicit permission of CAM.