I (Jonathan) have just returned from a couple of days camping to clear up the last to-do items for the year – this letter being a priority! Being in the thick of nature, with family, living simply and away from news-flow makes one realise just how noisy and stressful our daily lives have become – and let’s be honest – 2018 has been very challenging for most. Be it the political rhetoric, Brexit/Trump/trade war murmurings, increased volatility in share and foreign exchange markets, frustrating escalation in bureaucratic processes, personal challenges, I will chalk this year up to experience. The time away did help me distil some thoughts of 2018 and ideas for 2019:
There have been some incredible changes nationally this year. In 12 very short months we have seen:
A new president
Mr Cyril Ramaphosa. This time last year we were heading into an ANC conference unsure who would emerge leader of the ANC. With just 174 swing votes Jacob Zuma and the Gupta machine began to lose their grip on our beloved Nation and by mid-Feb, we had an Internationally well-regarded president.
A new Finance Minister
Mr Tito Mboweni – Incredibly we ended last year with the very well- dressed Mr Malusi Gigaba at the helm of National Finance. His credentials were slim, to say the least.
A new (returning) head of State Enterprises
Mr Pravin Gordhan – One of the biggest sufferers of the Zuma legacy have been and are the State-Owned Enterprises. Thankfully we have a well-regarded strong leader with National interest at heart. There is a long journey ahead though.
SARS is back in good hands
2018 saw the final axing of Tom Moyane who had done massive damage at SARS. It was fantastic to see the strength and independence of our Justice system in this process.
The slow demise of some bad apples
2018 would not have been a good year for Lynn Brown, Bathabile Dlamini, Hlaudi Motsoeneng, the Gupta family and several other families linked to the Zuma regime. The Zondo commission (although painful) has been good at revealing the rot and hopefully allowing the right people to take charge.
Cape Town dam levels are over 200% up from last year
This week last year the Cape Town dam levels were at a dire 32% and today they stand at 68%. A miraculous improvement. There is a lot of hard work ahead for South Africa in 2019 and the last year has revealed the depth of some of the issues. Unfortunately, being an election year, the political noise from the various parties will only escalate but seeing through it all be reminded that we live in a beautiful country where most people wish for a better future for all. We will all need to play our part. The noise from overseas has been particularly – strange.
Trump and his rhetoric
Have driven stock markets up and down around the world and we spend a lot of time with asset managers ensuring their processes can look past the noise that he has created. If you get time, have a listen to Michael Power discussing the rise of China as an economy and some interesting insights into the USA:
Michael Power – Investec podcast
Brexit still seems to have no real clarity
Hopefully with the deadlines looming some sort of deal will be thrashed out last minute which will let some sanity reign again. 2018 was a difficult year in the financial markets both locally and offshore. Over the year the local stock market (JSE ALSI) lost approx. 14% with listed properties losing around 21% year to date. Ironically the best returning asset was cash and bonds. Offshore the MSCI is down 2% year to date in USD. Most diversified Unit Trusts and our Model Portfolios weathered a low but respectable return due to the diversified nature of their underlying assets. While some clients would be tempted to move to the safety of Cash, we are feeling optimistic, especially locally, that from current levels returns should begin to again meet inflation beating expectations. We would encourage you to read a very interesting article from Prudential about investing in this current environment and some forward insights:
Prudential – Coping with the challenges of a lower return world
On a lighter note, spare a thought for those that invested into Bitcoin in the hype a year ago where it is now worth 19% of last year’s value. This highlights again the importance of a diversified portfolio of assets – especially for retirement funds.
Within GDA we are glad to advise that we have received a licence from the Reserve Bank to transfer foreign exchange in-house through the Investec platform. We have found the rates to be very competitive and the process relatively simple. Similarly, we also can open Dollar denominated accounts locally should you require. Give us a call if this is something you require. With the beginning of the year around the corner, we would also recommend we relook at your Retirement Annuity contributions as well as Tax-Free savings contributions for the Feb 2019 tax year. These are low hanging fruits that can assist you with your financial planning (as well as provide some needed tax relief).
Festive Season wishes!
As 2018 winds down we at GDA want to wish you a wonderful Christmas and Holiday season and to thank you for your continued support and partnership. May you find ways to close out the noise and enjoy some quality time with family and friends. We remain optimistic for a fruitful 2019 and look forward to working alongside you.
Kind regards,
Jonathan, David and the GDA team
Feel free to contact us if you have any queries at all.