In South Africa, the last few days have caused a stir! Jacob Zuma reshuffled his cabinet, international corruption fighters have gotten involved in the Gupta case, and Dudu Myeni has been replaced as chairperson of South African Airways (SAA).
- Last week, the International Monetary Fund (IMF) revised the global growth rate for 2017 and 2018 higher to 3.6% and 3.7% from previous estimates of 3.5% and 3.6%, respectively. This is in contrast to South Africa (see below) where there are have been further significant downgrades to growth forecasts.
- The EU Summit is taking place and Brexit will be one of a multitude of dilemmas to address. Others include: Catalonian independence, tyrannical rule in Turkey, the Iranian nuclear deal and the potential nuclear disaster in North Korea.
- Catalonian leadership has refused to denounce its bid for independence. A few large listed companies began the process of moving their headquarters out of Barcelona. The spike in uncertainty has led the Spanish IBEX35 index 1.19% lower month to date.
- The MSCI Emerging Market Index has hit a five year high, returning 58% since January 2016, and 30.5% in 2017.
- Jacob Zuma reshuffled his cabinet and appointed, David Mahlobo, a Zuma loyalist, as Energy Minister, this has been viewed by opposition parties as a push to get President Zuma nuclear deal past before the end of his presidency. This article by Stephen Grootes provides more light on the matter as well as an interview with Mahlobo.
- The IMF revised its growth rates for South Africa lower for 2017 and 2018 from 1% and 1.2% to 0.7% and 1.1%, respectively. Political uncertainty and low business and consumer confidence were the reasons behind the revision.
- Dudu Myeni has finally been removed from the board of SAA with her contract ending in November.
- Apart from the huge boost from Naspers this year, +61% in 2017, the ALSI is enjoying 2017 highs from BHP Billiton, Anglos and Glencore, amongst a number of other mining shares like Exxaro and Kumba, although gold and platinum shares remain very depressed.
- The FBI has gotten involved in the Gupta scandal, focusing on Ashish and Amol Gupta, who are American citizens, being potentially implicated in money laundering.
It is interesting to note that even at levels in excess of 58 000, in US dollar terms, the ALSI (excluding dividends) is 15% lower than it was at the dollar-based high in April 2011, and 11.5% lower than in November 2007. This implies that, in ten years, domestic equity investors have gone backwards in dollars, before dividends are included. This is one of the reasons that Dynasty continues to favour including offshore investments in client portfolios, where appropriate.