Sanisha Packirisamy What Italy’s debt issue and China’s counter-trade-war efforts could mean for SA As far removed as countries like Italy, China and Turkey may appear to be from South Africa, the local economy has been, and will likely continue to be, negatively impacted by the wide array of seemingly unrelated market issues – such as Italy’s debt woes and China’s retaliatory reaction to the US trade war – through a contagion effect. This is according to Sanisha Packirisamy, economist at Momentum Investments, who says that financial markets in South Africa are particularly vulnerable because of their depth and high level of liquidity. “While investor jitters started in Turkey and Argentina, where economic mismanagement was evident, financial markets in these countries are not as deep and liquid as South Africa and Brazil, which have been targeted in the latest risk-off episode. It is therefore far easier for investors to get out of positions in these tradeable markets, and as ...

David French Recent efforts to right the country’s listing economy were praised from all quarters at the recent South Africa-French Business Forum, attended by a delegation of French government officials and companies who are in the country to bolster bilateral ties. According to tax consulting director at Mazars , David French, these signals are significant at a time that South Africa is trying its utmost to win back the confidence of international investors. Commenting during a panel discussion on what the country needs to do to achieve this, French said that despite the positive sentiment at the forum, a near-disaster has been averted following the collapse of governance at SA Revenue Service (SARS). Having had first-hand experience of that decline, while working in the tax authority’s Tax Avoidance and Reportable Arrangement unit until recently, French says that fortunately, the decline was caught just in time. The extent of the decline at SARS is currently being uncovered ...

The reason you tend not to see ‘Third Pounders’ on the menu at fast-food chains apparently has more to do with poor arithmetic than healthy eating One of the foundation stones of behavioural economics is the recognition that the human brain is hardwired not always to act in investors’ best interests. Sometimes the instinctive mistakes that result are quite complex – for example, Andrew Lyddon, Fund Manager, Equity Value at Schroders refers to the ‘narrative fallacy’ underpinning people’s fondness for stories. And sometimes, Lyddon says that they are less so. The third ‘pounder’  “Take the curious story of the ‘Third Pounder’ burger” says Lyddon, referring to a case study from Against Empathy: The Case for Rational Compassion , a book by Paul Bloom. “Since it was launched in 1971, the McDonald’s Quarter Pounder has taken its place in the pantheon of fast food staples – and, while it has had to see off a lot of competition along the way, human nature has apparently helped”...

Ntombi Tisani Why your stokvel needs to be more than a deposit box Stokvels are on the move: moving from villages to cities, from mattresses into savings accounts and investment instruments. And as they move, they evolve and their potential for growth and their ability to create wealth increases. “Stokvels have progressed in both the way their role is perceived and in the way they operate,” says Ntombi Tisani, Head of Marketing at Old Mutual Personal Finance. “While they continue to play a key role in our communities; the arrangement of stokvels is increasingly reflective of changing social dynamics. These include expanded definitions of stokvels as hubs for socialising, helping to reduce costs, realising shared goals – like savings for holiday travel, building commitment and spreading financial education.” As South Africa’s R45 billion stokvel industry continues to grow, more and more financial solutions are being designed for the nation’s stokvel groups, now estimated to be...

The property market in South Africa remains unfavourable for real estate agents and sellers following years of low price growth and stagnant sales. However, this depressed market provides many opportunities for investors, provided that the properties are carefully chosen with thorough due diligence and a long-term investment plan in mind. This is according to Christo Botes, Executive Director at Business Partners Limited (BUSINESS/PARTNERS) who says that the depressed property landscape is the result of several factors, with the most significant being the overall anaemic state of the South African economy. “With household spending under stress, businesses under pressure, an overall unemployment rate of 27.7% and GDP growth of below 2%, investors with large deposits and financiers eager to extend property loans are scarce – especially following the recent downgrade of South Africa’s long-term foreign currency debt to BB from BB+ by S&P Global,” Botes says. He adds that real...

Chantalle Bell Many people grow up having conflicting values around money and wealth and misunderstanding how they work together. Often a person may say they want to be wealthy, but what they really want is financial freedom. It is of crucial importance to manage your money effectively, master it, and instruct it to do what you want it to do for you. You’ll start seeing how your money can work for you when your future needs become more important than your current wants. Money is what makes the world go round. Just like you have a job, your money has a job too, and it should work just as hard for you, as you have worked to earn it. Whether you’re a stay at home parent taking care of your home and family or a professional working crazy hours, having money in the bank is essential. All is possible through either investing or saving part of your hard earned cash every month. There is a clear difference between investing and saving. Saving is storing your money, while investing is g...

Dave Mohr & Izak Odendaal, Old Mutual Multi-Managers Global growth continues to disappoint. The Organisation for Economic Co¬operation and Development (OECD), a club of the world’s most advanced economies, recently revised their global growth forecasts for 2016 and 2017 down to 2.9% and 3.2% respectively. The OECD joins other multi-lateral organisations (such as the International Monetary Fund, the World Bank and the World Trade Organisation), central banks and private sector economists in cutting forecasts. The actual global growth rate has remained resilient at around 3% per year since 2011, close to its longer-term average. The disappointment stems from the failure to accelerate beyond that rate. Every year, forecasters expect the next year to see much faster growth. This has rarely happened, but once again, 2017 is expected to be better than 2016. There are several potential culprits. One is the ageing of populations across the developed world and another is the collapse in ...

Steven Nathan While most active fund managers argue that their skills enable them to outperform the market return, the majority of research proves what passive managers have known all along – that even though it may be possible for a fund to outperform the market, it is generally not probable. In the finance industry, the term “investment universe” refers to a specific group of investments that share certain characteristics. This universe can be defined as large as ‘all listed shares in the world’, or as narrow as ‘the top 40 shares listed on the JSE’. It can also refer to a particular country, industry or sector, or to a particular ‘factor’ that underlines a group of investments, such as size or valuation. According to Steven Nathan, CEO of 10X Investments , such demarcations are important, as they enable us to evaluate the performance (skill) of a manager investing in securities from that universe. “By identifying all the securities within a universe, it is possible to calculate ...

Elize Giese As the old saying goes, ‘do not put all your eggs in one basket’, the same principle applies to small business owners that want to get the most out of their savings, while minimizing investment risks. Elize Giese, Head of Investments at FNB Business says when investing business profits it is important for SMEs to have a diversified portfolio as a way of managing risks. “Diversifying simply refers to limiting risks by spreading a company’s investments across different instruments and products in order to cater for short and long-term business needs,” adds Giese. However, the extent to which a business diversifies depends on the nature of the business and its long-term investment and savings plan. Giese says small business owners with cash on hand should opt for investments that are not only diverse, but offer liquidity in the event that instant access to cash is required for unexpected short-term business needs. For example, there are various business investment products...

Choice is usually a good thing. The problem comes in when there are simply too many options muddying the waters. With approximately 1200 unit trust options available in South Africa, trying to decide which one is best can be overwhelming. The question is: how do you go about making the right choice? “The unit trust market can be seriously complicated for the typical investor,” says Tracy Jenson, Chief Product Architect at 10X Investments . “To help simplify the process, it can be narrowed down to these three simple questions you need to ask yourself before investing.” How long do I plan to invest for? The investment term impacts dramatically on your choice of unit trust. If you’re looking to invest for a specific goal, over a specific time period (i.e. less than five years) you should consider a unit trust that invests predominately in cash and bonds. “These funds are generally low to medium equity portfolios,” Jensen explains. “Over the short-term they reduce market fluctuations and...

Warren Buffett (Image credit: forbes.com ) At his recent annual general meeting in Omaha, the billionaire chairman of Berkshire Hathaway Inc. Warren Buffett once again reiterated that investors need to question the fees that are charged by expensive money managers and consultants who consistently fail to better the returns of index funds. At the AGM, Buffett explained to shareholders that probably the most important investment lesson in the world is that Wall Street salesmanship has masked poor returns for years. “Consultants have steered pension funds and others to high-fee managers who, as a group, underperform what you could get ‘sitting on your rear end’ in index funds. The arrangements eat up capital like crazy,” said Buffett. His views are echoed by Steven Nathan, CEO of 10X Investments , who agrees with Buffett’s criticism of the traditional investment system that mainly results in an enormous wealth transfer away from savers to the industry. “This system promotes hund...