THE DAILY BRIEF MARKETUPDATE WEDNESDAY,13JANUARY2021 GLOBAL MARKETS - CAPRICORN ASSET MANAGEMENT

The Daily Brief

Market Update                                             Wednesday, 13 January 2021

Global Markets
Stocks rose on Wednesday, tracking modest Wall Street gains, as expectations that a vaccine will
eventually win the battle against the coronavirus fuelled recovery hopes, while tight supply
expectations pushed oil prices to a one-year high.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.45%. Chinese shares rose 0.34%
while South Korea's KOSPI gained 0.04%. Japan's Nikkei 225 rose 0.49%, but Australia's S&P/ASX 200
bucked the regional trend and slipped 0.12%. U.S. stock futures edged up 0.15%. Treasuries
extended their rally in Asian trading, which pulled benchmark 10-year yields further away from the
highest in almost a year and caused the yield curve to flatten slightly.

Investors were betting that the incoming Biden administration would ramp up U.S. distribution of
coronavirus vaccines, which would allow large parts of the U.S. economy to reopen, said Peter
Essele, head of portfolio management at Commonwealth Financial Network in Boston. "The amount
of pent-up demand is slowly being unwound and over the next year it is probably going to result in
one the strongest growth in 20 years and markets are pricing that in," Essele said. "Right now, it's a

race between cases and the vaccine and the vaccine will ultimately win out and the curve will flatten
out."

On Wall Street, stocks fluctuated near unchanged for the session, not far from record highs. The
Dow rose 0.19%, the S&P 500 gained 0.04% and the Nasdaq Composite added 0.28%.

U.S. West Texas Intermediate (WTI) rose 0.81% to $53.64 a barrel, reaching the highest since
February after a larger-than-expected decline in U.S. crude inventories. Brent crude rose 0.87% to
$57.07. Oil prices were also supported after Saudi Arabia said it plans to cut output by an extra 1
million barrels per day in February and March.

Some investors were monitoring developments in Washington after at least three Republicans said
they would join Democrats in a vote expected Wednesday to impeach President Donald Trump over
the attack on the U.S. Capitol. With seven days remaining in his term in office, Trump faces
impeachment over accusations that he incited insurrection in a speech to his followers last week
before hundreds of them stormed the Capitol, leaving five dead. Trump says his speech was
appropriate. An impeachment trial could proceed even after Trump leaves office on Jan. 20, but
analysts say they don't expect any further political turmoil in Washington to affect
markets. "Markets since the election have been quite strong because uncertainty factor has been
removed," Essele said.

Yields on benchmark 10-year U.S. government debt fell to 1.1120% on Wednesday in Asia, down
from an almost one-year high of 1.1870% reached in the previous session after a well-received
auction of new 10-year notes. The yield curve, which had reached the steepest since May 2017 on
expectations for big fiscal stimulus under a new Democratic administration, narrowed slightly to 96.6
basis points.

The dollar nursed losses on Wednesday as a retreat in U.S. yields snuffed out its recent
rebound. Against the yen, the greenback fell 0.18% to 103.58. The dollar also edged lower to
$1.3679 against the British pound. Safe-haven spot gold added 0.28% to $1,860.51 an ounce.

Domestic Markets
The South African rand recovered on Tuesday, bouncing off a two-month low hit in the last session,
as a recent rally in the dollar cooled. At 1510 GMT, the rand traded at 15.3975 versus the dollar,
0.85% firmer than its previous close.

The currency has tumbled more than 5% since the beginning of 2021. Emerging market assets have
been under pressure in the last week from continued dollar strength and U.S. higher yields, which
are seen as negative.

Sentiment also soured badly over a new peak in daily coronavirus infections and doubts over South
Africa's vaccine supplies. "This afternoon, the rand has pierced the R15.40/USD level, ignoring the
announced essential lack of change in South Africa's lockdown restrictions last night, and instead
attempting to move stronger as global risk aversion wanes somewhat," Annabel Bishop of Investec
said in a note.

President Cyril Ramaphosa late on Monday said that the country had secured 20 million doses of
COVID-19 vaccines, which would be delivered mainly in the first half of the year. South Africa has
recorded more than 1.2 million COVID-19 cases and more than 33,000 deaths, the most on the
African continent, but is yet to start its vaccination drive. Ramaphosa, however, said the cabinet had
decided to maintain "level 3" lockdown restrictions, with relatively minor tweaks.

Stocks on the Johannesburg Stock Exchange (JSE) reversed some gains in the first fall since the
beginning of the year, as rising coronavirus cases and the continued lockdown hurt sentiment. The
benchmark FTSE/JSE all-share index dropped 0.35% to end the day at 63,535 points, while the
bluechip FTSE/JSE top 40 companies index ended down 0.38% to 58,493 points.

Government bonds firmed, with the yield on the 2030 instrument 2.5 basis points lower at 8.810%.

Corona Tracker

                      The number of new cases is distorted by cut-off times.

Source: Thomson Reuters

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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Disclaimer
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.