In her book, Abounding in Kindness: Writings for the People of God, Elizabeth Johnson reflects on astronauts who have seen Earth from outer space. She notes that the astronaut, Rusty Schweigert, who walked upon the moon, had this to say: “From the moon, Earth is so small and fragile, and such a special little spot in the universe that you can block it out with your thumb. Then you realise that on that spot, that little blue and white circle is everything that means anything to you – all history, music, poetry and art, birth and love and death, tears, joy…”
Contemplating Rusty Schweigert’s comments I began to muse. Supposing one was sitting on the moon gazing down at this beautiful blue planet Earth, contemplating where to invest one’s savings. Where would one invest? Of all the countries in the world, would an investor seriously consider South Africa as the ideal county to invest in? Probably not!
South Africa represents less than 1% of the world economy and only has approximately 400 shares listed on The Johannesburg Stock Exchange. In contrast, according to the Organisation for Economic Co-operation and Development, in 2019, there were around 41, 000 shares listed in the world with a combined market value of US$80 trillion. An investment offshore adds portfolio diversification to the one’s portfolio. Investing offshore diversifies the political risk associated with South Africa. The opportunities for investment globally are simply enormous!
In March 2020 Moody’s downgraded the South Africa to “junk” status with a negative outlook because of South Africa’s weak economic growth and ongoing deterioration in the government’s fiscal strength. “Junk” ratings exist to warn investors about the risks of investing in a particular country or investment asset.
The socio-political environment in South Africa does not look great either – unemployment, increasing government debt, government spending much of its revenue on paying salaries to bloated government employees and dysfunctional state-owned enterprises. There are daily media reports of wasteful and fruitless expenditure and on-going corruption and lack of accountability for dishonesty – unbridled corruption with very little consequence.
One’s investment first choice location is probably not South Africa!
Sitting on the moon, one might ask oneself “What currency would I like to own? US Dollars, Sterling, Euro or perhaps South African Rand?” Hmmmm…. Probably not South African Rand!
In April last year a US dollar cost over R19. At the beginning of June, a US dollar cost around R13.40. Currently a US dollar costs around R14.10. So, buying US dollars is 25% cheaper than it was a year ago! History has shown that over the last twenty years whenever there has been a strengthening in value of the Rand [and it is difficult to understand why the Rand has strengthened so much] it has been followed by a sharp decrease in value. At a 25 % discount it is an excellent opportunity to invest offshore!
Over the past twenty years the South African Rand has depreciated against the three major currencies (US Dollar, Sterling and the Euro) by +/- 4-6% per annum. This means that if the South African rand continues to decrease in value, the value of the investment will increase in Rand value. The Rand is expected to continue to devalue in the medium to long term.
Give us a call for more information on investing offshore. We look forward to presenting the opportunities to you.
“The moon stays bright when it doesn’t avoid the night!” – Rumi
Business as usual!
Never has the world experienced a global health crisis of this magnitude as the risks of Coronavirus (COVID 19) intensify across the United States, Europe and within our own country, South Africa.
The surge in Covid 19 and the Delta variant, last night forced President Cyril Ramaphosa to place South Africa in lockdown Alert 4 from midnight on 27th June 2021.
Our offices will close on 27th June 2021, we will all be working from our homes. It will be business as usual except we will not be able to have any face-to-face interactions. We can be contacted on the following contact numbers:
- Office: 041 3730601
- Leonie Els: 0849572353 firstname.lastname@example.org
- Greg Mills: 0610173468 email@example.com
- Kevin Mills: 0828001193 firstname.lastname@example.org
Please give us call us if we can assist you with anything. We will do our best to provide the best service that we can.
These are worrying times! We have never experienced a crisis of this magnitude and the disruption to our day to day lives, to society and the economy. We are being asked to make sacrifices to combat this virus and with it comes the anxiety of the isolation from family and friends. This disease can be defeated! We urge all South Africans to stay at home, keep safe and assist in combating this virus.
We pray that you will all stay healthy and well!