At this time, we usually reflect on the year past and consider what the year ahead may hold.
A Sunday Times columnist recently remarked “Living in the 2017 version of South Africa often feels a lot like being a passenger in a derailed passenger train, careering down the track at 260 km/h with a deranged giggly driver at the wheel.”
We have cycled through another round of cabinet ministers and done all the right things to achieve a ratings downgrade. Foreign investors have voted with their money, pulling R61 billion out of SA listed equities this year, but fortunately they still have an appetite for our bond yields, with net inflows of R60 billion.
This, together with a trade surplus, has supported the Rand, which has gyrated from R14 to the US dollar in January, down to R12.45 in March, up to R13.90 in April, then to R14.50 two weeks ago. The S&P ratings downgrade caused the Rand to fall but then to strengthen to R13.70!
Our stock market woke up in June after a long slumber, and soared by 18%. We do however need to hand a bouquet to Naspers, which rocketed by 68% during this time and now accounts for close to 20% of our JSE.
The next soap opera is about to commence; the ANC leadership elections. It must be said that even if Mr. Ramaphosa does get the job, he will have a monumental struggle to haul the country out of the hole dug by his predecessor and the state-owned enterprises, which have been burning money at record levels. This will require strong, decisive leadership, a Minister of Finance who can conjure rabbits out of a somewhat small hat, and the urgent need to restore business confidence.
Adding to the mix, we have ongoing uncertainty created by Mr Trump, Kim Jong-Un, various European challengers of the status quo, the eventual removal of Robert Mugabe after a reign of 37 years, and the appointment of a new Zimbabwean President, Mr. Mnangagwa.
We see the emergence of Bitcoins and other cyber currencies, which may well end up on the same list as the Dutch tulip bubble of the 1600’s, the Japanese property bubble of 1990 and the Dot-Com bubble of 2000, but could possibly also herald a future new order.
If ever there was ever a time to keep a cool head and focus on your long-term strategy, it is now. The two monsters “Fear” and “Greed” are prowling, ready to pounce, tempting many to take rash action.
Have a great summer holiday season!
Best wishes for 2018 from the team at Ascent Wealth Management.