Greetings and Happy Friday!
It’s good to see our country getting a break economically with the strengthening of the Rand on the back of the global commodities boom. The rand is trading at 5-year-ago levels and our trade surplus is at a record high. However, the JSE is still shrinking and that means there is over-concentration on local stocks in general, and particularly in the big dual-listed stocks. So, that alone makes it riskier than holding global stocks in our portfolios.
We’ve done well in our portfolios over the years by having greater exposure in global assets which, in their own right without the help of a depreciating Rand, have performed comfortably above our benchmarks. Therefore, while we experience this Rand strength, we also see in rand terms that our capital values are still increasing, which implies good balance in our portfolios. So, when we read the Businesstech article below, we can take comfort that we’ve at least isolated our capital from the poor choices our government are making which results in SA slowly but surely losing its competitiveness with the local currency following suite.
Now just look at Mauritius, ranked 30th and doing really well with its stable, open, tax-friendy economy attracting capital from SA and other countries. As investors, we always need to explore all legal methods and strategies to secure our capital against corrupt policies that are determined to exploit us in the name of Radical Economic Transformation. Watch this space…
9 areas where South Africa is falling behind the rest of the world
Non-profit organisation the Chandler Institute of Governance (CIG) has published its inaugural good government index, measuring the effectiveness of governments in 104 countries globally.
The institute said this is the world’s most comprehensive index of governance quality and outcomes, and is aimed at governments to understand and benchmark their capabilities.
The index takes a non-ideological and non-partisan view of governance, and by focusing on state capabilities and performance, the index does not prioritise any form of government over another.
It is made up of 34 indicators, which are organised into seven pillars:
- Leadership and Foresight
- Robust Laws and Policies
- Strong Institutions
- Financial Stewardship
- Attractive Marketplace
- Global Influence and Reputation
- Helping People Rise
South Africa
South Africa was ranked 70th on the list, behind other Sub-Saharan countries such as Mauritius (30th), Rwanda (53rd) and Botswana (57th) ranking above it.
The country scored highly for its robust laws and policies, where it is a match or even stronger than other countries globally.
This includes elements such as the quality of the judiciary, transparency and regulatory governance. However, the report shows that South Africa falls far behind in other areas – especially when it comes to uplifting its people.
The index also scored poorly because of its inability to create an attractive business environment. Some of the key areas where South Africa is falling behind the rest of the world include:
- Ability to attract investments;
- International trade;
- Education;
- Health;
- Personal safety;
- Income equality;
- Social mobility;
- Non-discrimination;
- The macroeconomic environment.
The best
The majority of countries ranked in the top 20 are European, with Finland and Switzerland securing the top two spots. Singapore, the Netherlands and Denmark round up the top five.
The CIG said that Finland scored highly on all of the above metrics as its government has a long history of adapting to change.
“Investment in research and high quality education has allowed the country to shift from a resource-based to a knowledge-based and technology-driven economy,” it said.
It added that Finland is a trade-dependent nation and an active proponent of free trade. It also scored highly for free education , 98% of Finland’s education system is state-funded, and strong anti-discrimination laws.
In the News this Week:
Friday, 07 May 2021
US Equities had a volatile trading day but managed to rally strongly into the close with the S&P managing to close above 4’200 points, just below its recent all-time high. The Dow Jones Industrial Average rallied more than 300 points, a fresh record high. Paypal rose 1.9% after reporting stronger than expected results as more consumers adopt digital payments, the company also raised guidance for the 2nd Quarter. The focus today will be on April’s jobs report that will be released by the Labor Department this afternoon.
European equity indexes continued higher on Thursday. Travel, energy and tech underperformed. Food & beverage, chemicals and construction were the biggest gainers. Industrial metals were broadly higher, extending their recent strength. The Bank of England kept interest rates unchanged. German factory orders beat expectations with both domestic and foreign orders outperforming expectations.
S&P500 +0.82% Dow +0.93% Nasdaq +0.37% FTSE100 +0.52% DAX +0.17% CAC +0.28%.
Asian equities gaining this morning. Taiwan outperforming on strength in semiconductors. Hang Seng leading Chinese markets with telecoms higher despite the latest on US-China tensions. Korea, Japan, and Aussie equities are all trading higher. China saw a pickup in trade activity last month with export growth topping expectations. The Caixin PMI showed services activity expanded at a faster-than-expected pace to a four-month high. RBA, the Aussie central bank, upgraded GDP forecasts and made downward revisions to the unemployment rate projections, they reiterated their focus on returning to full employment while maintaining ultra-easy monetary policy until 2024 at the earliest.
Nikkei +0.28% Hang-Seng +0.62% Shanghai +0.48% ASX +0.31%
SA Markets continued higher on Thursday. Banks rallied for a second day with Nedbank the biggest gainer in the sector up 2.55%, Firstrand gained 2.36% and Standard bank added 2.04%. Retailers gained 2.24% led by The Foschini group that gained 3.78%, followed closely by Mr Price up by 2.39%. The 10-year Government bond closed firmer at 9.08%.
Notable Gainers/Losers
Harmony +5.63% AB-Inbev +4.34% Distell +4.29% DRDGold +3.99% Foschini +3.78% Kumba +3.19% Anggold +3.09% Goldfields +3.09% Equites +3.63% Discovery +2.61%
Amplats -4.69% Sappi -4.30% Northam -4.13% Mondi -2.24% Redefine -2.13% Sasol -1.72% MTN -1.37%
JSE All-Share +0.39% JSE Top 40 +0.28% Industrials +0.53% Resources -0.52% Financials +1.74%
JSE All-Share 67’609
S&P500 4’202
USDZAR 14.21
EURZAR 17.15
GBPZAR 19.76
EURUSD 1.21
GBPUSD 1.39
GBPEUR 1.15
AUDZAR 11.05
NZDZAR 10.28
Brent Crude $68.45
Gold $1’821
Platinum $1’256
Palladium $2’951
Sources: Factset, Yahoo Finance, Trading Economics, BusinessDay Live, WSJ
Please give us a call or email if you need any assistance. Have a great weekend!
Kind regards,
Your TurnPoint Team
Vic Hodoul CFP®
Certified Financial Planner®
Cell +27 (0) 79 353 1076
Email vic@turnpoint.co.za
Office/Admin Manager:
Arlene Schoeman: +27 (0)21 555 1010
Email arlene@turnpoint.co.za
TurnPoint Investments
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