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By Aidan Freswick*
Covid-19 hit the world economy like a hurricane this year and left no place untouched. In the “pre-Covid-19 Vaccine World” it has resulted in a market crash, and here are some of the effects of this crash:
- The ZAR/USD exchange rate:
In a short time, the Rand depreciated to a record low of around R19.10 to the USD, and this was off the back of investors selling off emerging market currencies, as confidence in markets suddenly decreased as the Covid-19 virus surged through the world. It could be said that fear of the unknown was the driver of this event.
- Instant devaluation in the stock market
On the 9th of March, the stock market experienced a so-called ‘black Monday’ where the JSE lost more than 12% of its’ value, and US stocks lost over 7.5% of its value, the worst day on Wall Street since the historic financial crisis of 2007/2008. This was a result of investors feeling the aftershock of the tremor and a decreased demand for stock market investments.
- Unemployment at highest rate
Covid-19 placed the world employment market into a certain form of lockdown, some countries more harshly than others, and this limited economies to produce goods and services. Certain sectors could enjoy remote working and other sectors were left completely without any form of income because of not being able to work. South Africa has experienced an unemployment rate of 30.1% in Q1, the highest rate since 2009.
These examples are few, yet very critical in understanding the impact of the global pandemic. There is always a bright side, though. The first talks of a trial vaccine in South Africa were announced on the 23rd of June by the South African Medical Research Council. November marks the month where vaccines have developed to be more than 90% effective, which is a huge success given the fact that the benchmark set by the World Health Organisation (WHO), is at 50% to be considered a ‘successful vaccine’.
Read also:
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- JSE offers data to China to attract investors to SA
Besides the health benefit of a vaccine, this is how successful vaccines could impact markets and portfolios:
Demand for stocks and commodities:
As a successful vaccine becomes available and more importantly, accessible, it is possible to see investors demanding more stocks and commodities. Once the demand for stocks and commodities rise, the stock price generally increases simultaneously. What this means for investors, is that any wealth invested into markets would benefit from an increase in the prices of stocks and commodities in the form of capital growth within their portfolio.
Investor confidence:
A successful vaccine could positively influence foreign direct investment into South Africa. A ‘new norm’ would form as there would be a sense of normality in the way we do things. In theory, this could lead to a decrease in the unemployment rate as the demand for skilled and unskilled workers could increase as a result. Investors would generally be willing to take more risk.
Possible increase in economic activity:
As a result of businesses closing, and a rise in unemployment, the economic activity has declined significantly over the last year. A successful vaccine could be the start of a new era for businesses, which would have the capacity to produce more goods and services over time, and would result in an increase in GDP (a measure of production in an economy, such as South Africa). Increased GDP would result in more revenue collection by government, through SARS, which in turn will result in a healthier fiscal position for the local economy.
Surging volatility:
As we have seen over the last few weeks, the rand has improved significantly to below R15 levels against the USD, following a stagnant average price north of R16.50 to the USD. One could expect these levels of volatility in the short term as more news becomes available about a vaccine in South Africa and internationally, as well as new statistics around the entire pandemic and the global economic impact. If you refer to the volatility index below, the volatility levels are generally still high (above 20, where the average levels were between 10-18). Generally, when VIX levels are high, investors are not willing to take risks, volatility is noticed and there is a sense of uneasiness. A successful vaccine could result in a decline of the overall VIX levels which could indicate investors are willing to take more risk, as volatility in markets are reduced.
How could you best position your portfolio to counteract these risks:
If you think of airlines, and how many airline companies, unfortunately, could not keep their doors open due to Covid-19, you would imagine that it was a financial disaster for airline companies. Now, also imagine if all your wealth were invested into airline companies, the result would be that your capital disappeared into thin air. Therefore, it is important to diversify investments over various sectors and asset classes both locally and internationally.
Overall, a successful vaccine could be a driving factor that could positively enhance portfolio returns, as it has the potential to positively influence markets. The world is ever-changing, and it is best to move with the times. It would be a mistake to follow the old way of thinking, that markets will recover, and that the downturn is only short term. You may be right, but are you exploiting all opportunities to enhance portfolio returns? In the short term, it is close to impossible to accurately predict market behaviour and one can only follow fundamental statistics and the latest information made available. However, in the long term, it is of interest to learn from history and to best position investments to counter unforeseeable risks.
The events of the past year showed that any carefully made plans can be disrupted by an expected event of significant scale. The future will always be uncertain. It is advisable to navigate the challenges of investing in an uncertain market environment with the assistance of a qualified, experienced financial advisor.
Read more about financial planning.
- Aidan Freswick is a financial advisor based at Brenthurst Wealth Tyger Valley. aidan@brenturstwealth.co.za.
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
