The core message from Budget 2019 is that non-performing state-owned companies have become such a drag on the fiscus that it is difficult to place South Africa’s government finances on a sustainable path. This situation is compounded by an underperforming economy, which necessitates continued tax increases. New revenue raising measures amount to R15 billion in 2019/20, mainly by not compensating for bracket creep, which effectively raises personal income tax.
US markets soared at the start of the new year, with the MSCI World Index up almost 8% for January! This was the best year start in over 30 years, causing chatter amongst bear market speculators. The US delegation that visited China served to quell trade war fears and gave investors an initial feeling of hope regarding an extension of the current truce. The Fed kept interest rates stable, suggesting that the rates are reaching a more neutral ground.