Traffic officials police motorists on the M1 in Johannesburg. Picture: FREDDY MAVUNDA
Traffic officials police motorists on the M1 in Johannesburg. Picture: FREDDY MAVUNDA

Lifting Covid-19 lockdowns too early may have a lasting effect on economies as a recurrence could cause more destruction across global markets, says Ninety One’s co-head for asset growth, Philip Saunders.

“We’re going to see a variably geometric-type approach, but I think now there is a sense of urgency to start to peel back the lockdowns to actually limit the economic damage that’s been done,” Saunders said on a call to investors on Monday.

However, if governments try to open up too quickly and there is as a surge in new cases, this would result in the effect on demand “remaining more severe”. It would also interrupt manufacturing and production, resulting “in a more protracted bear market,” said Saunders.

Governments around the world have imposed lockdowns in a bid to contain and manage the spread of the coronavirus. As a result, markets have seen a major sell-off as the global economy comes to a virtual halt. On Monday, the Reserve Bank said SA’s economy could contract by as much 4% in 2020. 

As of Monday, SA had more than 1,680 confirmed cases and 11 deaths. More than 1.35-million cases of Covid-19 have been recorded worldwide, with nearly 300,000 of those recovered, and more than 75,000 deaths.

Italy, which became the epicentre of the crisis outside China, is one of the countries looking to ease restrictions as infections and deaths slow. Denmark and Austria became the first two countries in Europe to announce plans to loosen restrictions, Bloomberg reported.

“From a harsh, dispassionate point of view, there is no perfect solution. There is a tendency to overreact a bit in the first instance, and I think this is being gradually recognised,” Saunders said. He added that there is going to be a move to progressively getting people back to work, simply because the economic pain of not doing so is probably greater than the risk of going back too quickly and letting the virus rip again.

Ninety One, which used to be Investec Asset Management, has a more-than 50% exposure to SA and the UK, with £121bn (R2.3-trillion) under management on September 30 2019, making it the biggest asset manager in SA. It was listed on the JSE and London Stock Exchange (LSE) on 16 March 2020.

Saunders said the current market rout is a crash and not a typical bearish environment. “Prices got driven to levels that were a function of chronic illiquidity and there was uncertainty about whether the monetary authorities, particularly the US Fed were able to respond appropriately.

“This is a sort of shock to growth; GDP is going to contract sharply, it’s going to take time for GDP to re-attain the levels it would have been running at, and that obviously has implications for corporate earnings and government deficits, and so forth.” 

He lauded the reaction of monetary authorities and governments in helping to curb the impact of the virus. He is expecting economic recovery to kick off in June.


Central banks around the world have intervened to fight against the spread of the coronavirus with the US Federal Reserve and Bank of England slashing interest rates. Last month, the SA Reserve Bank cut interest rates by a bigger-than-estimated full percentage point to 5.25%. It also announced a tranche of liquidity measures to help support the economy.

While China’s production is expected to recover better than forecast as a result of Asia’s healthier economic fundamentals, Western markets will have to bump up their current modest levels of growth, Saunders said.

For emerging markets, it depends on their underlying fundamental conditions, he said, “and, they are much more mixed. I think we’ll see much more casualties from this and I think that we will see debt rescheduling in a number of countries, we will see significant divergence in terms of the performance of different emerging markets coming out of this.” 

Update: April7 2020 
This article has been updated with comment and Covid-19 details.

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