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:
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!
Healing God, bring healing to those
who are sick with the Coronavirus and be with their families and neighbours. We
pray especially for those who are isolated, that they may know your love. Stay
by our side in this time of uncertainty and sorrow.
