Stay abreast of COVID-19 information and developments here
Provided by the South African National Department of Health
On My Mind
– Getting SA back on course
Former CEO of Sanlam Private Wealth
Oct 27, 2017
President Zuma clearly continues to believe he is untouchable. On the other hand, with his party’s elective conference just around the corner, perhaps he’s all too aware that the writing may finally be on the wall for him and his acolytes. Either way, it doesn’t require rocket science to conclude that his surprise (umpteenth) Cabinet reshuffle last week was a last-ditch attempt to protect his and his cronies’ own interests.
Although the Russians have denied any influence by their president, Vladimir Putin, President Zuma’s appointment of former State Security Minister David Mahlobo as our new Energy Minister certainly raised an eyebrow or two about the proposed R1 trillion Russian nuclear deal – as well as a R5 billion deal with a Russian oil company to explore oil and gas blocks off South Africa’s coast.
The sad reality is that despite the best efforts of South Africa’s business sector and civil society groups, while President Zuma continues to blunder on unchecked, there’s little hope that our floundering economy can be steered out of the doldrums and back into the trade winds.
The continued policy uncertainty, lack of clear strategy to stimulate economic growth and political instability are the main factors scuppering any chance we may have had of joining other emerging markets in reaping the benefits of the synchronised global economic recovery. Unfortunately, in his Medium-Term Budget Policy Statement (or mini budget) on Wednesday, Finance Minister Malusi Gigaba did nothing to address these shortcomings.
The Minister painted a rather grim picture of the severe challenges facing our economy. Our growth forecast for 2017 has been adjusted downwards from the 1.3% projected at the time of his predecessor’s budget speech in February, to 0.7%. We’re also facing a staggering revenue shortfall of R50.8 billion and national debt approaching 60% of gross domestic product (GDP). And yet, despite Minister Gigaba warning that state-owned companies have become a ‘major fiscal risk to the country’, further bailouts to the tune of R14 billion to some of these embattled institutions are on the cards.
While these dismal figures do nothing for investor confidence, neither did the Minister’s failure to offer us anything by way of a radical economic strategy to turn the tide around. In this respect it was in line with his recently announced 14-point ‘inclusive growth plan’ to boost the economy, which also lacked substance and had no clear plan for implementation. All in all, it was an uninspiring speech, which didn’t do his credibility as Finance Minister any favours. This sentiment was echoed by a distinctly unhappy rand, which dropped sharply in response.
The bottom line is that mere lip service (yet again) isn’t going to fix the leaks in our boat. The international investment community is also tiring of unconvincing, empty words not backed by action. During a working visit to New York last week, it became clear to me that the one thing foreign investors are now pinning their hopes on is the possibility of an anti-Zuma camp win at the end-of-year elective conference.
More than one analyst I spoke to indicated that if Team Zuma remains behind the wheel (read: if his ex-wife, Nkosazana Dlamini-Zuma, is elected), this will lead to a big sell-off of South African equities, as the risk trade-off is just not worth it. South African bonds might still attract investment for as long as they remain at investment grade – but it remains to be seen how long this will continue to be the case.
Political analysts well versed in the inner workings of the ruling party are fairly unanimous in their view, however, that presidential hopeful Cyril Ramaphosa has little chance of pipping Dlamini-Zuma to the post come December. It’s clear that the Zuma side has done its homework – the leadership race is very much a ‘battle of the branches’, and Ramaphosa currently doesn’t appear to have the support he needs to succeed Zuma as ANC president.
In the meantime, South African and international investors alike will be faced with continued uncertainty as our economic fortunes continue to move south, thanks in no small part to the unconvincing and disappointing performance of our new Finance Minister.
The next challenges for our fragile, beleaguered currency will no doubt be the fresh spate of reviews by the rating agencies at the end of November and the ANC’s leadership contest in mid-December. To my mind, the outcomes of these two events are likely to be negative, and won’t bring the relief investors are hoping for. It may still be some time before we can get our boat watertight and back on course.
What does all this mean for investments? The important thing to remember is that investors need to be sufficiently diversified offshore for the short and medium term, to allow for hedging against both political and economic risk, as well as further currency depreciation. We’ve already factored in the potential fallout that both additional downgrades and the ANC’s elective conference may bring about, and our clients’ portfolios are appropriately positioned regardless of the outcome of these events.
Read more about the different ways SPW can assist you in accessing the global market here.
Sanlam Private Wealth manages a comprehensive range of multi-asset (balanced) and equity portfolios across different risk categories.
Our team of world-class professionals can design a personalised offshore investment strategy to help diversify your portfolio.
Our customised Shariah portfolios combine our investment expertise with the wisdom of an independent Shariah board comprising senior Ulama.
We collaborate with third-party providers to offer collective investments, private equity, hedge funds and structured products.
navigating the complexities
Sanlam Trustees International
are they a good investment?
The great lockdown:
one year on
Head of Equities
IHG: focus on
quality pays off
Sanlam Active UK Fund
BUDGET 2021: THE RIGHT INTENT,
BUT RISKS ABOUND
Investment Economist at Sanlam Investments
INVESTING IN 2021:
WHAT TO EXPECT
Sanlam Private Wealth
MINING: IS THE
THROUGH THE HYPE
Head of Equities
South AfricaSouth Africa Home Sanlam Investments Sanlam Private Wealth Glacier by Sanlam Sanlam BlueStar
Rest of AfricaSanlam Namibia Sanlam Mozambique Sanlam Tanzania Sanlam Uganda Sanlam Swaziland Sanlam Kenya Sanlam Zambia Sanlam Private Wealth Mauritius
GlobalGlobal Investment Solutions
Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.