2016 was a year of many surprises. Few expected Brexit and Trump, years of Rand weakness turned around with 13% Rand strength, after under performing for 4 years. Resource shares made a comeback, and Pravin managed to hold on to his job.
2017 is bound to be another year of surprises and as we don’t profess to foretell the future, here is a glimpse of some of the events and trends to look out for this year.
Politically, there are elections in France, Italy and Holland and with voters going against the establishment, there could be some upsets here. Usually protectionist strategies are bad for markets, but this has not been evident so far after some of the election upsets. In SA, the ANC elective conference in December is sure to bring some changes and with rumblings of a possible cabinet reshuffle soon, Pravin could find himself replaced. We are also not out of the woods with the ratings downgrade.
Disruption continues to be a big trend in 2017.
Online retailers compared to traditional mortar retailers, Airbnb to hotel and accommodation chains, sustainable energy suppliers to fossil fuel suppliers, technology and automation replacing many labor intensive industries, digital media and traditional media, self-driving and car sharing. Many companies are having to reevaluate the way they do business.
A large South African asset manager recently commented that the chip in super computers 40 years ago cost $45mil each, we now have similar chips in our mobile phones and they cost $60 each.
Coronation Fund Managers recently came out with their 10 year return forecasts. Their expectations are for some lower returns for the next 10 years compared to the last 10. These returns are annual averages, but importantly, they caution that the next few years could easily be somewhat lower than the 10 year average.
At Ascent Wealth, we believe in a long term focus, knowing that there will be up and down years along the way. Making changes based on short term conditions is proven to erode value, so sticking to your strategy is the best way to get meaningful results.