On 13 May, in our Newsflash entitled Searching for the bear market trough, we wrote that a signal for the turning points in bear markets is typically when there is a total vacuum of optimism, and when the prevailing news is overwhelmingly pessimistic. We penned this at a time when clients and even global investment…
On Wednesday, the US released its inflation figure of 8.5% for the 12 months ending July, against the consensus expectation of 8.7%, this being the lowest year-on-year number in recent months and the first sign the Fed’s aggressive rate hiking policy may be moderating inflation. On the back of this marginal decease in the inflation…
Economists believe that people’s expectations are an important influence in their decisions, whether these be to invest in expanding a business, or to defer or accelerate purchases. Economist John Maynard Keynes labelled the role of expectations “animal spirits.” Consequently, what we think may happen in an economy in the future could determine how we act…
On Wednesday, the US Fed hiked its benchmark rate by 75 basis points for a second consecutive month. This in the face of the June inflation number, which came in at a shock 9.1% and above the consensus estimate of 8.8%. Given that GDP fell by 0.9% in the second quarter, after declining in the…
In recent months, we have often faced questions from clients around the likely duration of the currently depressed equity market conditions and what the prospects for a meaningful market recovery may be. Of course, we are not able to address these concerns with any degree of conviction. However, we have previously written about markets being…
One of our preferred global managers (Terry Smith – Fundsmith Equity Fund), wrote in an update this week on how inflation, rising interest rates and an increasingly likely recession have two obvious effects on equity investments – fundamental effects and valuation effects. He admitted that he has no insight as to the extent interest rates…
ESG stands for Environmental, Social, and Governance and, according to PWC, investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities. With Western countries having moved fast to isolate Russia in the wake of the war in Ukraine, energy security and the green economy have…
Markets have just recorded their worst quarter since the early days of the Covid-19 crisis in 2020, with the reality of persistently high inflation continuing to dictate direction. The MSCI World index dropped by 8.4% in June and 15.5% for the second quarter of 2022, while the S&P 500 fell by 8.3% in June and…
SA fundamentals are weak, but external factors will also play a role in determining the rand’s direction in the second half of 2022 The following article has been commissioned for Dynasty clients and authored by Alison Barker, economist and head of Analytics Consulting FX Solutions, this being our Investment Committee’s primary source for currency research.…
The era of low interest rates and low inflation seems to be behind us, with most investors and governments admitting that inflation is more persistent rather than being of a transitory nature, as was previously put forward. Rising fuel and energy prices, primarily as a result of the war in Ukraine, supply chain disruptions due…
The first six months of the year were the stock market’s worst half since 1970, with the S&P 500 having declined by 21% year-to-date. Bonds, which are traditionally seen to provide more stable returns, have also had a torrid year – the ten-year Treasury note having fallen 10% in price. Indeed, it appears there has…
Our first newsletter for 2022, titled The Year of the Fed, outlined why we felt the US Federal Reserve’s reactions to persistent inflation would be the key determining factor in how markets faired this year. What we didn’t know was that their job would become that much harder as inflation had another, and perhaps more…
Given this week’s blowout, where the S&P 500 sold off another 6% to the end of Thursday, we’re questioning whether the global markets are already pricing in a worst-case scenario. The US Fed adjusted its policy in raising interest rates by 0.75% on Wednesday, using the escape clause of data dependency. Equity markets first reacted…
Questions have been raised about the tech sector’s stock market dominance over the past decade and whether this is likely to continue. An article on this subject appeared in a recent edition of the Wall Street Journal. Individual tech stocks have recorded some of their sharpest falls this year, with hundreds of billions of dollars…
Have inflation and earnings forecasts in the US economy peaked? It is these twin peaks, or symbiotic key factors, that are likely to influence market direction over the coming months, as it’s still the US that pulls most of the levers on the global economy. The Fed is well on a path towards monetary tightening,…
Seasoned investors have witnessed a range of events that have surprised over the years – pandemics, natural disasters, political upheavals, wars, terrorism, financial crises… and more recently unexpected, decades-high inflation in many of the world’s largest economies. Most of these events have had a devasting effect on financial markets. In the modern era, no country…
While we have already written much about inflation this year, it seems appropriate to continue in this vein as the actions of central banks, and the consequences of market participants pre-empting or second-guessing their actions, have global equity markets on the brink of being classified as bear markets – defined as being down 20% from…
History shows that turning points in bear markets occur at the points of maximum pessimism where there is almost a vacuum of optimism. Although markets initially reacted well last week, as US Federal Reserve chairman Jerome Powell pushed back against incremental 0.75 percentage point rate increases (the actual hike was 0.5 bps), markets have since…
Smithson represents a small carve-out within the equity component of our Dynasty house-view Funds and is our only component focussed on the small and mid-cap sectors. As such, Smithson has a high beta characteristic and will tend to be much more volatile than our other fund components. We trust that you found that the presentation…
The Federal Reserve this week announced a 50 basis points increase in its rate, the first hike of this magnitude in 20 years. This move did not come as a surprise at all and was in line with many analysts’ expectations and, indeed, with the Fed’s communications. FOMC meetings are becoming a bigger event as…
We wrote in March about how the war in Ukraine could change everything. In fact, according to Professor Yuval Harari, an Israeli public intellectual and historian, what’s at stake for everyone across the globe increases as the conflict continues. More than two months into the conflict, Ukraine and Russia have not yet managed to reach…
The IMF has revised its global growth outlook for 2022 and 2023 downwards to 3.6% for both years. This is despite inflation risks falling. The question is whether we are now facing a recessionary environment. According to UBS research, there are three factors that can mitigate this risk: First, European spending firepower should limit the…
The “bullwhip effect” was coined in 1997 and refers to a phenomenon within supply chain management whereby shifts in consumer demand cause greatly exaggerated changes further up the supply chain. Inventory swings act in bigger and bigger “waves” in response to consumer demand, with the largest “waves” impacting the suppliers of raw materials – either…
Finance Minister Enoch Godongwana delivered his inaugural Budget Speech on 23 February 2022, the content of which has already been widely publicised and digested by different stakeholders. Of greater interest to us were certain Exchange Control amendments announced by the Reserve Bank after this date, which we believe to be of particular relevance to our domestic,…
With international markets facing headwinds in 2022, one would have expected the rand to be on the back foot. After all, rising interest rates in the developed world, growing inflationary pressures, “risk-off” due to the war in Ukraine, and sanctions on Russia would all seem to point to international investors gravitating towards safe haven assets.…
In one of our first communications in January, we indicated that inflation would be the big story of 2022. Even before war broke out in Ukraine, there were indications that the nature of inflation in the US and the rest of the world was shifting from transitory to persistent. And this, as we predicted, would…
As mentioned in our Market Update, the quarter was characterized by concerns around higher-than-expected inflation, a more hawkish policy response by the US Fed in terms of rate hikes, and the war in Ukraine. How have these factors impacted our portfolio positioning? Dynasty-selected portfolios that are aligned with a quality style investment philosophy, generally underperformed…
There is no doubt that the onset of the conflict in the Ukraine led to increased inflationary pressures across the globe, arguably setting the scene for a deeper drawdown on global equity markets than had been experienced up to 24 February, the date of the invasion. For example, the S&P 500 was down 12.82% on…
The Russian invasion of the Ukraine late in February started against a backdrop that was already proving to be a challenge for some regional equity markets, specifically in the US. As 2022 dawned, market participants turned their collective focus to the looming benchmark policy interest rate hikes by the US Federal Reserve in response to…
According to John Mearsheimer, a respected international relations scholar in the US, law and morals and ethics matter in the international system, except when they are in direct conflict with a nation’s own strategic interest. This with reference to an article penned by Oscar van Heerden and published by the Daily Maverick on Wednesday. Van…
“The war in Ukraine could change everything.” This is according to a TED talk by Professor Yuval Harari, an Israeli public intellectual and historian. He describes how, besides the regional and deep humanitarian crisis, so much is at stake for everyone across the globe if the conflict is not resolved soon. By “resolved” he means…
Last weekend, President Vladimir Putin ordered Russia’s nuclear forces into a higher state of alert, the first time the Kremlin has done so since the Russian Federation was established in 1991. According to Daryl Kimball, executive director of Washington-based Arms Control Association, “This is the first time in the post-Cold War era that a US…
Russia’s invasion of Ukraine, in what some fear will be Europe’s largest battle since World War II, has added volatility to markets which were already impacted by decades-high global inflation numbers, with interest rate hikes from various central banks (predominantly the US Fed) to follow during the course of the year. These combined events have…
Just how different this year is proving to investors! Most analysts expected some action on interest rates from the US Federal Reserve in 2022, but perhaps not the five rate hikes they’re now pricing in. Inflation was clearly driving upwards, but we’re seeing much higher, more consistent price increases. Since early January, many global institutional…
Key take-outs compiled by Reder van Rooyen (investment analyst at Dynasty) Metrics used in the investment process: As a precursor, the Fundsmith Equity Fund looks at the following metrics when identifying strong and resilient companies to invest in: Return on Capital Employed (ROCE), gross margins, operating profit margins, cash conversion and interest cover. As…
The book The Wisdom of Crowds by James Surowiecki refers to the idea that large groups of people are collectively smarter than individual experts when it comes to problem-solving, decision-making, innovating, and predicting. This is especially relevant as it pertains to financial markets, but there is an important caveat that participants in the crowd need…
The week was dominated by the mixed fortunes of two of the world’s largest companies, namely Meta, the holding company for Facebook, and Amazon. Facebook parent company Meta has produced less than stellar results, and – according to UBS – is the TikTok for “old people”. Its results led to a historic plunge in the…
The week kicked off with a manic Monday on Wall Street, followed by another selloff on Tuesday. The Nasdaq 100 now trades at 25 times forward earnings, down from 30 at the end of 2021. On balance, global markets have continued the week on this soft note, with the MSCI currently down 8.5% year-to-date. But…
Equity market corrections are certainly not unusual and are both more frequent and less severe than market crashes. The Nirvana, of course, is when markets move up steadily, such as the period between October 2016 and January 2018 when the S&P experienced positive returns for fifteen consecutive months, leading to a cumulative return of 36%…
A consideration expressed by almost all our domestic clients when progressing their wealth externalisation strategies, is around whether the prevailing exchange rate is at an acceptable level for currency conversion purposes. In addressing this issue, we consider many factors including the historic long-term trend line (which empirically illustrates rand depreciation of on average around 5%…
Many of our clients are aware that the Dynasty House-view Funds include a relatively minor weighting to the global small and mid-cap sector via Smithson, a listed UK-listed Investment Trust. In this five-minute video interview, Jill Carey Hall, head of small and mid-cap strategies at Bank of America, explains why stocks in this sector, particularly…
With the consumer price index in the US hitting a four-decade high in December 2021, rising 7% year-on-year, the investment conversation in 2022 will be dominated by persistent inflation and its impact on financial markets. With a collision between pandemic-related supply chain bottlenecks, labour shortages and growing demand, the US Fed is no longer talking…
As we enter a new year, it is an opportune time to reflect on the performance of the markets in 2021 and cast our eyes to the future. Looking back to the start of the previous year, we expected equity markets to deliver moderate returns; cautioned that many geopolitical risks were still in play; and…
Early last year, we published a news edition entitled “The year of the vaccine”. Our thesis was that the success (or not) of the vaccine rollouts would determine the timing and extent to which global economies would reopen and normalise. This would, in turn, have a profound impact on the sustainability of the equity market…
Last week’s introduction to our news flash concluded that “the Omicron variant does not warrant a change in our view that the global economy is on a road – albeit bumpy – to a full recovery”. As coronaviruses constantly mutate, they tend to lose their pathogenic intensity. Omicron seems to be following this path. Those…
Our header may appear presumptuous, but this week the Omicron fear factor that gripped financial markets last Thursday and Friday, appeared to have reversed as we initially witnessed rebounds in both equities and currencies, with subsequent market directionality driven primarily by a focus on the US Fed’s updated outlook. Last week’s global market declines, which…
Local investors can be forgiven for thinking the reason for accelerated rand weakness in November is primarily related to SA-specific factors. However, until yesterday, the major influencer driving even developed market currencies weaker was outright dollar strength. As of yesterday, the dollar had strengthened against the Euro by 3.52%, the British pound by 2.73%, and…
The S&P 500 Index continues to set records despite known risks, such as growth slowdowns, supply chain issues, geo-political tensions between the US and China, rate hike probabilities, and persistent inflation. This has led to the S&P 500 Index now appearing very expensive, even as measured on a forward PE metric. However, it is likely…
As the COP26 conference winds down, it has seen some interesting wins for countries in the developed markets, and saw the US and China put aside their differences long enough to agree on an accord that will help trim global pollution. The overarching goal of the conference is to put measures in place to limit…
The current debate dominating the markets, and being discussed by market watchers, is the relationship between liquidity and growth. The question being asked is what markets would look like without the assistance that has helped plump up economies. Stimulus, if you will, is now starting to get cut back. Some argue that, as liquidity is…
By October month-end last year, global markets were facing massive risks to sustained recovery prospects. The looming US election was turning ugly, while there were still major concerns over the success of the Covid vaccine trials. As we stand one year later, the MSCI is up 39% as measured in dollars, this being significantly higher…
The primary economic talking point for the financial markets this week is whether global inflationary pressures will prove transitory or persistent and how central banks will respond. This has been a recurring theme over the past few months, one that we have touched on several times in our weekly news flashes. The impact for currencies…
During hard lockdowns implemented to curb the spread of the coronavirus, supply of some key items was severely restricted. Well after initial panic buying caused a shortage of essential household items in several markets, some continue to be severely impacted by other shortages as the global economy re-opens. The ongoing supply shortage of semi-conductors making…
The volatile trading during much of September has continued into October, with markets seemingly unable to pick a particular direction. According to Bloomberg, the S&P 500 alternated between gains and losses of at least 1% for four straight sessions this week – the longest stretch since June 2020. Ten-year Treasury yields, too, are swinging wildly.…
Global markets were volatile for much of September – and the last week of the month in particular. The instability was enough to erase the strong gains made in the first two months of the quarter (Q3), leaving global equities flat to slightly down for the three-month period. It is important to place this disappointing…
Two prominent South Africans have spoken out against the morass of corruption, poor economic policy, and mismanagement in which the country finds itself under ANC governance. Billionaire, Rob Hersov, and Frans Cronje, director at the Centre for Risk Analysis, have both hit out at policies such as expropriation without compensation (EWC) and outlined why they…
Given South Africa’s volatile currency and the fact that our economy represents less than half a percent of world GDP, astute investors will usually seek exposure to other territories. This enables them to mitigate local risks and take advantage of a wider set of global opportunities and hard currencies. The case is, however, sometimes made…
Debt woes at Chinese property developer, Evergrande, sent markets into a spin earlier this week, with investors questioning whether the company would default on $119 million in interest payments due on its bonds. Founded to capitalise on China’s ascending middle class and booming economy, the company is fuelled by $300 billion in debt and is…
With inflation worries on the horizon internationally and locally, many are concerned that this could adversely affect economic growth and corporate earnings, which have just started to recover from the extreme downside caused by the global coronavirus pandemic. As inflation increases, central banks are tapering off stimulus packages, and need to do so in a…
The rand was surprisingly strong this week, gaining 2.3% against the dollar. What is unusual is that it achieved this in the midst of a stronger dollar and slightly softer global equity markets. Ordinarily global risk-on sentiment leads to a weaker dollar, rising global equity markets, and stronger emerging market currencies. At the moment, the…
International markets seem set on strong growth, with the S&P 500 closing several days at new highs. The S&P hit its 50th all-time high on 24 August 2021, placing it 20% up for the year to date. It seems this market is pricing in job gains with the US probably having added 725,000 jobs in…
Covid-19 has catalysed an innovation culture with many new software applications, security solutions, devices, and ways of working coming out of people’s need to hunker down at home while carrying on with their day-to-day jobs. An explosion in small business registrations and start-up activity bodes well, since small enterprises drive economic growth. According to the…
South Africa’s Department of Social Security raised eyebrows this week by proposing a comprehensive overhaul of the social security system that could significantly increase the tax burden for most taxpayers. This comes at a time when government has broken the social contract through its inability to rein in corruption and deliver efficient, quality social services…
The market is closely watching US inflation, which was in line with July expectations after dramatically exceeding them in June. For much of the year, investors have been concerned that inflation, which is generally linked to growth, could spike – leading to a drastic, market-shaking change in monetary policy and that the US Federal Reserve…
This week’s edition focuses on the global airline industry, as its operational status serves as a primary indicator of whether the global economy is truly open, or not. On the home front, the major development was President Ramaphosa’s announcement last night of a Cabinet reshuffle. Our analysis is summarised in terms of positives and negatives…
Chinese tech giants lost hundreds of billions of dollars in market capitalisation early this week as the government widened its crackdown on the sector – a move that has unnerved international investors who remember how Beijing last year put the brakes on the planned initial public offering (IPO) for Ant, one of the country’s largest…
An article in the New York Times this week asks whether the US economy is running too hot or too cold as it reboots in the wake of Covid-19. Although the economy is alive with possibilities, inflation is outstripping pay gains for many workers, with the number of those employed far below pre-pandemic levels. Both…
As predicted at the beginning of July, former President Jacob Zuma’s incarceration has unleashed waves of violence that have contributed to government uncertainty and policy volatility. It is no exaggeration to describe all of this as an insurrection – an attempt to create chaos to achieve political purposes, namely the early release of Zuma and…
The biggest news of the week for our South African clients was undoubtedly the fact that the country’s former President, Jacob Zuma, handed himself over to police to begin his 15-month incarceration for contempt of court just before midnight on Wednesday, 7 July. Zuma, who was found guilty of contempt of court for refusing to…
An introduction by Dynasty Founder, Barry Dubb: The Constitutional Court ruling sentencing former President Zuma to 15 months in jail will probably only result in him sitting for 4 months with parole for good behaviour. On the one hand, the assertion of: the rule of law in the judgement; the principle of equality before the law;…
Retail investors’ interest in cryptocurrencies has again exploded over the past year, with Bitcoin’s rollercoaster ride during this period prompting many to ask what role digital currencies may play in the future. Some of our clients are curious about whether cryptos will one day evolve into a viable alternative to fiat currencies or to inflation-hedge…
Despite patches of volatility in the global markets, we have ended the second quarter on a high note for global equities. Yet there is a sense that we are reaching an important inflection point as the US economy continues to recover at a blistering pace, with a successful mass vaccination programme allowing for the rapid…
In April 2020, the rand touched lows of R19.34 to the US dollar in the wake of the beginning of the Covid-19 crisis and a decision from Moody’s to downgrade South Africa’s sovereign credit rating in the first quarter of the year. At that time, we published an article about why the rand was likely…
Powered by consumers with extra savings, businesses eager to hire and enormous policy support, the United States’ current economic recovery is billed as being “unlike any in recent history”. According to the Wall Street Journal, businesses and workers are expected to emerge from the downturn with far less permanent damage than occurred after recent recessions,…
According to new research from Bloomberg Economics, a housing bubble is starting to form in many countries worldwide as they ease themselves out of the Covid-19 crisis. The research indicates that New Zealand, Canada and Sweden are the frothiest housing markets, with the UK and the US also ranking high in risk. Bloomberg Economics uses a…
In recent News Flash editions, we have written about the “K-shaped” economic recovery, while today we focus on the sustainability thereof, as well as how governments intend using taxes as an instrument to plug their deficits. New research from Stanlib highlights just how badly the pandemic battered the world economy in 2020, while offering hope…
Following the worldwide loss of 255 million full-time jobs in 2020 — four times more than during the global financial crisis — the International Labour Organization (ILO) warns that we could see a loss of a further 36 million to 130 million jobs worldwide this year. The ILO says that this pain will be unevenly…
Amazon this week announced plans to acquire MGM in a transaction worth $8.45 billion – a deal that encapsulates some of the biggest trends of our time, including the convergence of big tech and entertainment and the way in which the pandemic has accelerated digital adoption. The acquisition is Amazon’s second largest after its $13.7…
The International Energy Agency has signalled that for the world to limit global warming and get to net zero emissions by 2050, all new fossil fuel investments – oil, coal and gas – must come to an end. This news might add even more momentum to the trend we’re seeing of financial institutions backing away…
Despite growing worries about post-pandemic inflation and the danger of a bubble, stock markets appear impervious to warnings from the sceptics. Where it was the technology and home entertainment sectors that surged during last year’s lockdowns, investors are now betting on cyclicals, commodities and banking to boom in a turbo-charged economic recovery. Government and central…
During the 1980s, the US lived through Reaganomics, an economic philosophy rooted in a steadfast belief in deregulation, lower taxes on businesses and the wealthy, and less federal government spending. Now, as America starts to emerge from the pandemic, we’re seeing its almost-exact opposite on the ascent: Bidenomics. The term refers to President Joe Biden’s…
One of the questions policymakers and analysts are beginning to grapple with post-pandemic is the potential impact of Covid on birth rates in a world where many rich countries are already seeing population decline. Business Insider reports that women are taking a ‘rain check’ on babies, due to both economic distress as well as their…
In August 2020, we postulated as to whether the recovery of the world economy would take the shape of a V- or a U- or an L. What we are seeing emerge instead is a K-shape recovery, where different parts of the economy and different countries recover at different rates and in different magnitudes. A…
The world economy is showing surprising resilience in the wake of the pandemic, boosted by fiscal stimulus and low interest rates. Several large economies have reported higher than expected GDP growth for the first quarter of this year. Year-on-year, China’s economy grew by a record 18.3% in the first quarter, while US output in the…
Despite a bit of a rollercoaster ride for big tech shares in the first quarter of 2021, the global equity markets were robust during the quarter ended 31 March 2021. The question on everyone’s lips is how much longer the markets can show such resilience and what changes we can expect to see as vaccine…
‘Responsible investing’ is becoming a mainstream movement, with more institutions evaluating Environmental, Social, and Governance (ESG) criteria when they screen potential investments. This is a development we are watching with great interest at Dynasty and it is a trend that we broadly support. But before we look at the pros and cons of ESG, let’s…
We have many clients in South Africa who are content with their lifestyle and have no plans to move abroad any time soon. They enjoy the weather, have close family ties in the country, and believe that they can sustain their way of life into retirement and beyond. The question that many of them ask…
As factional politics in the ANC comes to a head, it is obvious to state that there will be winners and losers. The $64 000 question is: Who will win and by how much? In this high stakes contest, the policy and future prospects of South Africa depend on the outcome. Politics, not economics, is the…
US President Biden has set out the first part of a grand infrastructure and jobs proposal, which will see $2 trillion ploughed into America’s infrastructure and its shift to greener energy. The White House plans to pay for the proposal by raising corporate taxes and eliminating tax breaks for fossil fuels. The massive spending on…
Generous central bank and government stimulus programmes have helped to keep the world economy and equity markets afloat since the start of the pandemic. As vaccination drives accelerate across the globe, economists and analysts are speculating about what will happen when these programmes run to an end. Equity markets in China offer us some insight,…
Fund managers around the world are scrutinising human rights and environmental concerns in their investment decisions. BlackRock—which last year committed to selling stakes in fossil fuel companies—has signalled that it now plans to press companies about their policies related to human rights, as well as biodiversity, deforestation and water. Economists forecast that a failure to…
Australian virologist and Nobel prize winner Sir Frank Macfarlane Burnet declared in 1962 that one of the most important revolutions in history was the “virtual elimination of social diseases”. After all, within two decades, smallpox and polio would be eliminated from most advanced nations. Yet, according to the Financial Times, Burnett had not fully considered…
Economists and analysts have, from early in 2021, signalled the danger that stock markets may face a ‘taper tantrum’ this year – in other words, a surge in US treasury yields in response to an indication that the Fed may begin tapering quantitative easing, despite the Fed’s continued reassurances to the contrary. The fear is…
Despite steep losses in US stocks on Wednesday and Thursday, much of the narrative this week focused on how the world economy will move beyond the pandemic into recovery. With more than 225 million vaccine doses already administered across 100 countries (according to Bloomberg) – and an accelerated pace of inoculation – hopes are rising that the worst of the…
Bitcoin again captured news headlines as the cryptocurrency surpassed the $54 000 level on Friday. The currency has moved more mainstream with companies such as Tesla and MicroStrategy having recently acquired/added to their holdings, and PayPal allowing 346 million users to buy and spend Bitcoin on their platform. But the explosive rise in the Bitcoin…
This week’s News Flash does not include much on current affairs, focusing instead on the highly topical and contentious subject of taxing wealthy individuals. As we show in our headline article for the week, a wealth tax is not a new (nor a necessarily good) idea, but it is one that has gained traction in…
Given South Africa’s structural inequalities, historic injustices and high poverty, taxing the rich to uplift the poor is an idea that resonates with many stakeholders in our society. It’s thus unsurprising that the debate about whether the government should introduce a wealth tax has flared up again at a time when there’s an urgent need…
At current levels, the Rand provides a good opportunity for externalising funds The Rand exchange rate appears to be benefiting from a rare range of positives that are likely to continue over the next 3-6 months. Importantly, this does not mean that Rand is expected to strengthen substantially further in the weeks ahead, but it…
Whilst 2020 will undoubtedly go down in history as the year of the Covid-19 pandemic, we suggest that 2021 will be the year of the vaccine. This week’s news covers articles on the unprecedented and sheer logistical scale of the global vaccine roll out. Yet poorer emerging markets are likely to lag behind their wealthier…
“Trilemma” is a term in decision-making theory. Unlike a dilemma, which has two solutions, a trilemma offers three equal solutions to a complex problem. However, the options of a trilemma are conflictual because of mutual exclusivity, which makes only one option of the trilemma achievable at a given time. From an investment perspective, there is…
The polarisation of Americans by an autocratic leadership and a lack of bipartisan politics will be one of the most unfortunate, enduring legacies of the Trump presidency. Newly elected President Biden’s inauguration speech on Wednesday was underlined by a call for unity, in that to restore the soul and secure the future of America, this…
Last week we published our newsletter for the final quarter of 2020. In this first weekly version for 2021, we look at some of the ironic parallels between US politics over the last few months, especially the last two weeks, and of those traditionally closer to home. Indeed, the failure of political systems is most…
As we enter 2021, it is worth reflecting on our expectations at the beginning of 2020 when facemasks, social distancing, and national lockdowns were not yet a part of our day-to-day lives. At the time we were expecting moderate growth and a possible market correction but were also reasonably confident that a global recession was…
Investors often seek our advice as to which currency/currencies we would recommend for their offshore investments and why. Given how many funds are run from the UK and the Channel Islands, it’s a question that has come up more often since the Brexit vote sent the pound tumbling in 2016, and more recently in 2020…
Over the years, clients have sought advice about structured products, especially at times when the markets are in turmoil or when they are concerned about downside risk in equities markets. Such products, also known as structured notes, are vehicles that offer a guaranteed return on investment, within certain parameters. These products are generally packaged by…
One of the most misunderstood areas of taxation among higher net worth South African investors is the implications of holding a high-value portfolio of shares in an offshore jurisdiction. Many wealthy investors have sizeable global share portfolios with banks in Switzerland, the Channel Islands, and other parts of the world. They have established these relationships…
As we approach the end of a tumultuous year, there is a major disconnect between portfolio growth and the lasting hardship that has been inflicted on the global economy and society as a whole. Year-to-date the MSCI was up 15.78% on Thursday, gold was up 24%, and Bitcoin was up 218%, all as measured in…
This week was characterised by a slew of legal and regulatory actions against a few of the globe’s largest media and digital platforms, namely Facebook and Google. This is on the back of recent fines against Amazon, as well as the State of California’s decision against Tesla in May, which prevented the manufacturing plant from…
By late October, there was ample evidence that the global Covid infection rate was spinning out of control. Equity markets were weaker, down a second consecutive month, while the upcoming US election was dividing the country’s population like never before. However global traders betting on a continued slump absorbed a $163bn loss in November, adding…
This year has been characterised by immense duality: The record velocity at which markets declined and then recovered; despair and hope; growing income disparity; stimulus on/stimulus off; and investor sentiment around increased Covid-19 infections versus positive vaccine developments. As we transition into 2021, such duality may continue as ‘‘traditional’’ industries begin to shift to pre-pandemic…
In our July article entitled “Equity Market Direction – Will it be the ‘P’ or the ‘E’?” we wrote about the well-known fact that corporate earnings (E) are a very influential driver of share prices (P) over the long-term. To quote US-based investment advisory firm, Fisher Investments: “With two companies now reporting positive advanced trial…
In his song, Thuma Mina, late South African jazz musician Hugh Masekela anticipated a day of renewal, of new beginnings. The translation of Thuma Mina – “send me” – was the mantra that newly elected President, Cyril Ramaphosa, built on in his State of the Nation speech on 16 February 2018, which drew on the…
At the time of writing, it still remains to be seen as to who will win the United States election. In the midst of the process, the temperature of the nation has become feverish with protests ranging from the electoral system itself to the validity of mail votes and late counting. Meanwhile, the incumbent president has…
While second waves of the Covid-19 virus are causing a major upheaval in some key developed markets this week, the biggest news item and risk to global stability is still next week’s US Presidential Election. I recall the French president, in the early to mid-2000s, saying that the US election was too important to the…
In last week’s News Flash entitled ‘‘Money doesn’t grow on trees’’, we highlighted that the most substantial and enduring impact of Covid-19 will be the dramatically increased level of debt on almost all global government balance sheets. As a logical sequel, this week’s quote relates to the extraordinary level of money-printing by central banks. On the…
On predicting uncertainty “We have in economics adopted an approach to thinking about uncertainty which assumes you can attach probabilities to more or less every conceivable event and that choice under uncertainty framework has dominated economics for 50 years … and that is simply not how people either could or do think about uncertainty.” On…
Perhaps the most substantial and most enduring impact of Covid-19 will be the dramatically increased levels of debt on almost all global government balance sheets. The economic impact of the pandemic has severely affected both the income and expenditure sides of the fiscal equilibria – as tax revenues plummet due to decreased economic activity and…
As the globe continues to grapple with Covid-19 and its societal and economic impacts, it is noteworthy how some positive themes are emerging: Increased pressure is being brought to bear on president (Trump), and past president (Zuma), to hold each of them accountable for ‘unusual’ payments to avoid tax and to prove guilt on corruption…
In my previous article in this two-part series, I looked at how consumer behaviour is changing as a result of the ongoing Covid-19 crisis. As people’s attitudes, spending patterns, working lives, and behaviours evolve to accommodate a new reality, each enterprise in the world will also need to adjust how it operates to minimise the damage…
As we survey the markets for the third quarter of 2020, we need to look past the September pull-back to recall that July and August were both exceptionally strong months. Back then, the tech titans and trillions of dollars in stimulus programmes were powering stock markets to giddy heights, with the MSCI World Stocks Index…
We live in strange times with little visibility into what lies ahead for the markets in the months to come. Despite Covid-19 plunging every major economy in the world into a downturn for at least one quarter of the year, stock exchanges worldwide and especially in the US have enjoyed an extraordinary recovery, albeit with…
In the times of the ancients, rulers like Roman emperor Nero would ‘debase’ their sovereign currencies by adding lower value metals to gold and silver coins to increase the supply of money. Throughout history, this has seldom ended well because of the inevitable inflation in consumer prices that follows currency debasement. In today’s world of…
South Africa has one of the highest measures of income and wealth inequality in the world. But we are not alone. The benefits of economic growth in many major developed economies are increasingly not being shared evenly. Governments can play a key role in making economic growth more inclusive through various actions: Rethinking policy goals…
While 2020 has been a year unlike any other and we certainly hope that we are through the worst of it – the infection rates, the lockdowns, the economic impact, the fear and the uncertainty – perhaps we need to realise that this is potentially the new normal and not just an isolated bump in the road.…
This week’s theme focuses on success and regress over the past week within corporate and country specific contexts. Ironically, we feature the Tesla share price as a loser, although we continue to support the profound innovation and global disruption emanating from the company itself. Conversely, traditional homegrown South African grocer Shoprite, delivered a most impressive…
This week’s global news focuses on a somewhat positive aspect of the Covid-19 pandemic – the acceleration in adapting and developing technologies that can minimise the impact on the environment: France is allocating a significant portion of newly available funds to green technology; Amazon is making progress in overcoming legislative hurdles to enable it to…
Amazon, Microsoft, Facebook and Tesla are notable beneficiaries of the accelerating trend towards a digitalized economy. This week it was announced that the world’s richest man is now also the world’s first $200 billionaire. Amazon CEO Jeff Bezos broke the wealth barrier on Wednesday as the shares of his company continued to surge on skyrocketing demand for online…
This article was written by Professor Ivor Sarakinsky – bespoke for Dynasty clients. In times of the long knives, corruption is a double-edged sword. The factional battles within the ANC are now coming to a head as groupings fight for control, rather than the heart and soul, of the organisation. Who will remain standing, will…
As at the time of writing, the S&P 500 is headed to its fourth-straight weekly advance, with technology companies amongst the leaders in the benchmark’s gains. It is common knowledge that major technology companies have been a beneficiary of the acceleration to digitalisation caused by business and consumer responses to Covid-19. But on Wednesday, Apple…
Since the lows on 23 March 2020, the S&P500 has bounced by just over 50%. This has largely been driven by technology heavyweights, such as Apple (up 102%), Amazon (up 65%) and Tesla, which is likely to soon be added to the S&P500, (up 280%!). Together the top technology companies comprise about 22% of this…
There is palpable anger in the land about corruption. The anger is largely focused on what the ANC is doing and failing to do about the scourge. If we separate party and state, it is useful to look at the scoreboard of what the state has achieved so far in fighting corruption. Critical state institutions…
Since the heavy crash and subsequent rally in global equity markets in the first half of this year, many investment market participants have been asking about the extent and timing of the recovery from the rapid and devastating impact of the fight against the spread of the Covid-19 virus. These questions are often based on…
Since the heavy crash and subsequent rally in global equity markets in the first half of this year, many investment market participants have been asking about the extent and timing of the recovery from the rapid and devastating impact of the fight against the spread of the Covid-19 virus. These questions are often based on…
A question we continue to pose to ourselves is – will it be the ‘P’ or the ‘E’? This vexing subject was debated in our opinion piece dated 3 July under the same header. As major equity markets (the P), will end yet stronger in July, we note that the forward consensus earnings forecasts (the ‘E’), remains mostly…
This week bore witness to various political leaders pursuing personal and party agendas above all else, risking the prosperity of their own countries in the process. From the closure of US and Chinese consulates, to President Trump’s protectionist election campaign, and President Xi Jinping’s clashes with India, Britain, Canada, and Australia, the scale of disruption…
In a similar pattern to that of the 2008 Global Financial Crisis, it appears to be Main Street (small businesses, the middle class, and the general economy), and not Wall Street (large investment firms, major corporations, and super-wealthy individuals), who are carrying the real burden of the economic impacts of the coronavirus. Millions of people around the…
This week saw global equity markets rise once again, in defiance of worsening economic fundamentals and forward earnings forecasts, primarily caused by the Covid-19 pandemic. To explain this paradox, we have included a link to a piece by Robert J Shiller, an American economist, entitled “Understanding the Pandemic Stock Market.” Further underlying our cautious approach…
This article has been compiled exclusively for Dynasty clients by Dr Lance Vogel from Analytics Consulting, who is represented on the Dynasty Investment Committee. It is a well-known fact that corporate earnings (E) are a very influential driver of share prices (P) over the long-term. As a result, investment strategists will study the performance of…
In times of crisis, it is only natural to want to look beyond the volatility and imagine what the new normal will be when things settle down. As we all do our best to weather the storm of Covid-19, there is no shortage of forecasts and predictions about how the world will look once we…
Global markets are showing few signs of settling down, with sentiment vacillating between hopes for a sharp ‘V-shaped’ global recovery and continued concern about the economic impact of the novel coronavirus. On the one side, we have countries around the world slowly emerging from severe economic lockdowns; on the other, the reality is that the…
In trying to score Finance Minister Tito Mboweni’s much anticipated Supplementary Budget out of 10, we broke the answer up into three components: Firstly, the current fiscal situation, secondly, the quality of the plan as outlined in the document and thirdly the executability of the plan. South Africa’s finances are in pretty dire shape. The…
This week Gita Gopinath, the IMF’s chief economist, announced that the decline in GDP for 2020 would be worse than forecast a few months ago, and that the Fund has lowered its expectations for an economic rebound next year. Meanwhile in South Africa, our economy is forecast to contract by around 7% for the current…
“The individual investor should act consistently as an investor and not as a speculator.” – Benjamin Graham, a British-born American economist, professor, and investor Benjamin Graham’s statement was made in the context that the future is very difficult to predict and that decisions should be based on real facts and analysis rather than risky,…
“The difficulty lies not so much in developing new ideas as in escaping from old ones.” – John Maynard Keynes, a British economist These words especially resonate with us today as we evaluate the impact that Covid-19 will have on consumer behaviour and the way businesses will be reshaped. For example, to maintain business sustainability…
When the going gets tough, the tough get going: World leadership has been under a magnifying glass since the offset of Covid-19. Some leaders have excelled, such as Prime Minister of New Zealand – Jacinda Ardern, Prime Minister of Norway – Erna Solberg, Chancellor of Germany – Angela Merkel, and President of Taiwan – Tsai…
As we approach the end of May, the S&P Index looks set to post a gain of 4% for the month, with various stock market indices across the globe in sync with this trend. Meanwhile, in the US, 36 million Americans have filed unemployment claims and GDP has contracted by 4.8% in the first quarter…
Once again, markets this week were ignited by optimism that a potential vaccine to the coronavirus may have been discovered. Each time there is a glimmer of potential for Covid-19 preventive medication, markets tend to soar, but these fluxes are not based on fundamental tenets. Even if a cure were to be developed, approved, and…
This week was marred with those once in favour, falling out of favour. There has been public tension between President Trump and Dr Fauci, with Trump previously tweeting about firing Fauci and now saying that Fauci’s concerns over opening the economy too early, are unacceptable. President Ramaphosa has also had a challenging week, as South…
This article was written by Professor Ivor Sarakinsky – bespoke for Dynasty clients. The clichés of a crisis being an opportunity are doing the rounds at the moment with Covid-19, directly and indirectly, bringing South Africa to a near standstill. Crisis also exposes and amplifies deep-seated fault lines in society that no longer can be…
The economic distress in the US came into greater focus today with the announcement by the Labour Department that more than 20.5 million jobs were shed in April. This prompted Michelle Meyer, head of economics at Bank of America, to state that unemployment is “literally off the charts”. The estimated job loss numbers in the…
This week was once again positive for equity markets with returns for April now at staggering levels as quantified below. This has been caused by massive central bank stimulus programs across the globe, as well as by optimism that a vaccine against Covid-19 may be brought to market sooner than originally anticipated. Balance this positivity…
The World Health Organisation has specifically praised South Africa for its ‘incredible’ response to Covid-19. Meanwhile, the global community is in shock over how badly the US is handling the outbreak, with a Paris-based political scientist saying, “America has not done badly, it has done exceptionally badly” and others saying that the response from the world’s richest and most…
The world has become connected – yet at the same time isolated – as a third of the global population still suffers varying degrees of restrictions placed on their movements. These regulatory measures are warranted and have been effective in “flattening the curve”, but the general environment continues to pose many challenges. As the lockdowns…
Dynasty acknowledges that Covid-19 is first and foremost a humanitarian crisis. However, our consistent standpoint since the first regional lockdown on 23 January 2020 by the central Chinese government to quarantine the centre of the outbreak in the Hubei province, is that human and economic health are very much symbiotic. This view is also reflected…
Crises bring perspective and positive reflection with them. For instance, President Ramaphosa has been globally recognised with how he has handled the Covid-19 crisis and has continued to display strong and decisive leadership traits. This week he placed Communications and Digital Technologies Minister Stella Ndabeni-Abrahams on special leave and ordered her to make a public apology…
The Covid-19 pandemic is a source of anxiety and suffering for many people around the world. While political leaders, scientists, NGOs, and other stakeholders are working on solutions to the humanitarian and health dimensions of the crisis, our primary objective as Dynasty is to protect clients’ wealth and look after their financial interests during this…
Between the global COVID-19 crisis and the decision from Moody’s to downgrade South Africa’s sovereign credit rating in Q1 2020, the rand has had a torrid year so far. Is R18.70 to the US dollar fair value, could it fall further, and what are the chances that it could rebound? As regular readers of our…
It would be an understatement to say that the first quarter of 2020 has been a wild ride. The US’s three major stock indices — the Dow, the S&P 500 and the Nasdaq Composite — dropped 23.2%, 20% and 14.2% respectively for the quarter. The MSCI World, meanwhile, slumped 21.9% for the quarter in USD…
In a not unexpected move, Moody’s downgraded South Africa’s sovereign credit rating to one notch below investment grade at Ba1. They also kept South Africa’s outlook as negative, indicating the risk of a further downgrade within the next eighteen months. As a result of this move, South Africa will no longer form part of the…
Dynasty is deeply aware that Covid-19 is essentially a humanitarian crisis. Due to extensive media coverage on the human, social, scientific, and statistical aspects of the virus, we thought it would be informative, in the capacity of the custodians of our clients’ wealth, to run a weekly series covering the economic and investment impacts of…
Global Franchise’s defensive qualities provide support Equity markets have again fallen significantly as fears of a further spreading of the coronavirus, and likely stricter containment measures (particularly in the US), have been compounded by the emergence of a price war in the oil market, after Russia refused to agree to production cuts proposed by Saudi…
The Rand is likely to remain substantially undervalued as we wait for SA to be rebalanced out of the global bond index at the end of April 2020. The currency could strengthen somewhat after the rebalancing, especially if SA and global infection numbers have improved. The currency is significantly undervalued against all the major currencies.…
The world is slowing down, with a third of the globe having some sort of restriction placed on their freedom of movement. It is the first day of 21 days of lockdown in South Africa, while in other countries: Police in India are accused of assaulting people who do not follow the lockdown parameters; America…
What we know today is that even though the Coronavirus pandemic continues to spread across the world, with certain emerging market populations being particularly vulnerable, there is evidence that regional infection rates can indeed be contained, as evidenced this past week in China. Last Friday, in our opinion piece entitled ‘The Coronavirus – Economic Crisis or Health…
It has been an eventful week to say the least, with Covid-19 was officially named a pandemic. Although taking precautions should be encouraged, panicking and making rash decisions should not. There is potential that the reaction to Covid-19 and the oil trade war could cause a global recession, markets had the worst day on record since the global…
“Panic is highly contagious, especially in situations when nothing is known and everything is in flux.” – Stephen King Stock markets across the world had their worst day since the 2008 financial crisis on 9 March this year. A more than 30% intra-day crash in the oil price added further volatility to a market already spooked…
Covid-19 concerns continue and the impact that it is having on global economies is coming to the fore. At the moment the most heavily impacted industries are supply chains, travel and airlines. Retail has also been impacted as people are shopping less and restricting activity in public spaces. Global News After it looked like stocks were on the…
Subsequent to the 2020 Budget Speech and the announcement of a shift from negative exchange controls to a capital flow management system to regulate cross-border capital flows, the Financial Surveillance Department of the South African Reserve Bank (“FinSurv”) issued Circular No. 2/2020 (“the Circular”) outlining in (marginally) more detail the proposed capital flow management measures…
The fear from investors that COVID-19 will have an impact on global supply chains and in turn, corporate profitability, has resulted in a stampede towards safe-haven assets. This has resulted in markets falling between 10% and 14% and some of the biggest drawdowns since the 2008 Financial Crisis. We, at Dynasty, do not know exactly how deep the reversal…
As we correctly predicted, Tito Mboweni in this weeks budget speech decided against increasing the VAT and tax rates, in favour of reducing the government wage bill. Rather, he provided real income tax relief to individuals, in the form of above-inflation adjustments to all tax brackets and rebates, as well as a promise to reduce…
Moody’s has reduced South Africa’s growth forecast for 2020 to below one percent. This in itself does not bode well for the possibility of a downgrade by Moody’s at the end of March. Still, the budget speech will take place next week and this should bring South Africa’s prospects into sharper focus. Global News Roger…
Yesterday President Ramaphosa gave his State of the Nation Address (SONA) which received mixed reactions. It wasn’t that President Ramaphosa let us down on his orating skills, or in his vision of what South Africa could do for its populous and how it could be an international powerhouse. Many share his vision of this potential.…
The Senate voted to acquit President Trump to his great glee and to the Democrats’ disdain. The process is not over, and the Democrats are already talking of different avenues to take. If anything, it is displaying the pettiness of American, and in turn global, politics. Global News As was widely anticipated, President Trump will…
This week has brought eventful news: the UK is leaving the EU; Trump may be acquitted today; and the Coronavirus has been classified as a global health emergency. Locally, the Public Protector has been asked to step down; Eskom’s CEO has been creating a buzz, and Cosatu has plans to rescue Eskom! Global News Britain…
After four years of Brexit uncertainty, Prime Minister Johnson’s majority in parliament has allowed him to pass his Brexit deal! There are still hurdles before it is finalised, but the steps are in motion. Tito Mboweni flew the flag for South Africa in Davos this week, saying that besides immediate steps to resuscitate the economy,…
Please find below an article from Kevin Lings, Chief Economist, STANLIB: In 2019 the Rand strengthened by 2.8% against the US Dollar, after depreciating by -13.9% in 2018. In 2017 and 2016 the Rand had strengthened by 10.5% and 13.2% respectively, after collapsing by -25.4% against the US Dollar in 2015. Clearly the Rand is…
What an eventful week: The impeachment trial has begun, Russia’s government resigned, and Australia received some desperately needed rain. Locally, there have been many shifts too – the SARB lowered rates, the Zondo Commission resumed, and President Ramaphosa made forward strides with regards to Eskom. Global News President Trump’s impeachment trial has begun. Democrat Adam Schiff read…
We continue to live in risky times, but as we noted in our final newsletter for 2019, the markets last year outperformed expectations and delivered solid returns for investors. Looking ahead to 2020, our message continues to be that, while we’re not overly excited about global return prospects for the year, we are not anticipating…
We have faced situations where distributions to beneficiaries of offshore trusts are problematic where the recipients are tax resident in various countries around the globe, such as the US, UK, Australia, Israel and Europe. We’ve asked Robyn to provide her expert insight, the first jurisdiction she is focussing on is the US, with the other…
Endowments are an overlooked instrument among people seeking to maximise the tax efficiency of their investment portfolios, but they can be a useful tool under certain circumstances. They are particularly useful for people who have a higher marginal tax rate than 30%. We believe that the only class of endowment that is really worth looking…
With 2019 rapidly unwinding, it is an opportune time to reflect on the year that was and to cast our eyes ahead to 2020. But first, let’s rewind to 2017, an uncertain and difficult year for South Africa’s economy. As we sat on tenterhooks to find out who would lead the ANC and the country,…
Welcome to our last News Flash of 2019. We wish you peace and joy as the year draws to a close and may your journey into the new decade continue on this note, accompanied by much prosperity. Our Weekly News Flashes will resume on the 10 January 2020. Global News Boris Johnson has won a conservative…
SAA has finally gone into business rescue. What this means for the long-term prospects of the business is still unknown, but a business rescue practitioner will be appointed immediately. This may be a good move as at least changes are being made to the bulky state-owned enterprises, and this will in-turn alleviate the weight bearing…
Over the past few weeks there have been many developments regarding the health of South Africa’s economy, centering around whether there will be a downgrade to junk status in March 2020. Currently, this seems like the most likely scenario, and for this reason, Dynasty is maintaining its investment strategy of protecting our clients’ portfolios from…
A mosaic or tapestry of news was in store for us this week. Many different stories evolved as we made our trudge towards the end of 2019. In South Africa, there were new appointments to SOE leadership positions, accompanied by arrests in connection with state capture and corruption. Globally, the US passed a bill to…
Globally, there continues to be much disruption: China is battling to maintain growth in the face of the Trade War; Germany has been flirting with recession for years now; Hong Kong is in turmoil; and South Africa is just attempting to stay afloat. As a result of this, Moody’s has adjusted its global economic outlook negatively, a…
The three big stories of the week have been that: China and the US seem to be on their way to the first phase of trade agreements to mitigate the trade war; President Trump’s impeachment enquiry is heating up; and President Ramaphosa is focusing on gaining investment for South Africa. Global News China and the…
This week Finance Minister Tito Mboweni gave his Medium-Term Budget Policy Statement (MTBPS) and painted a gloomy picture. Debt has ballooned, and the country is no better off, unemployment is at record highs, and Eskom is without a credible plan. Global News Democrats took the next step in the impeachment process of President Trump. The US House…
The step change in the Government fiscal numbers depicted in the Budget in Feb 2019 compared with those released in the MTBPS in Oct 2019 – only 6 months later – cannot be ignored Obviously the Moody’s credit rating announcement scheduled for tonight is a primary concern for the financial markets and SA’s inclusion in…
So much has happened this week — maybe it is the last surge of fervour before the lull of the end of the year: the DA has had a week horribilis that will hopefully precede much-needed introspection; Brexit has had its feathers severely ruffled once again, but is seemingly moving closer to a possible conclusion; and…
Even though load-shedding unexpectedly reared its head again this week, there have been many positive cogs turning South Africa’s future and eradicating the rot of state corruption. Even though it seems that Zuma’s cronies are still at work, many of them are being removed week by week from the influence they have had on how…
High net worth families used to rely on creating a trust as a tax-efficient vehicle for growing their assets and passing wealth from generation to generation. But tax authorities and governments around the world have tightened up laws and regulations to prevent the affluent from using trusts to shield their income and capital gains from…
Despite some blonde global leaders recent efforts, the world is more open to emigration than ever before, capital knows no borders, and it’s increasingly common for the members of a mid to high-income South African family to be scattered around the globe. From the young professional working in Dubai for a few years before returning…
With more and more people formally emigrating from South Africa, many because they have been advised that emigration automatically terminates one’s tax residency in South Africa, it is worthwhile revisiting how one ceases to be tax resident in South Africa and the South African tax obligations of the termination of South African tax residency. An…
As we enter the home stretch of 2019, many of the same themes that have dominated headlines for the past three years continue to dictate the direction of the markets. But in addition to the volatile brew of Brexit, trade wars and instability in the Middle East, a number of analysts and economists are beginning…
After a gloomy midweek, global markets have recovered slightly, despite the multiple adversaries, the biggest of which is the ongoing trade war. The soap opera of current politics continues to grasp attention from the concern of a potential global recession. Global News The ISM Manufacturing Index, which tracks manufacturing activity in the US, posted the biggest contraction in September since…
This week has been a big news week, with our two top newsmakers President Donald Trump and Prime Minister Boris Johnson in seriously hot water. A complaint was filed over a call President Trump made to the Ukrainian President, and Prime Minister Johnson was found to have lied to the Queen. The week brought into…
It is not all trade wars and Brexit news this week, only partly. Of course, sadly, that does not mean that it is all good news. There was a drone attack on a Saudi Arabian oil facility which has been blamed on Iran. After existing tensions with Iran, President Trump threw his weight behind Saudi…
This week was all about politicians and their impact on society, from Prime Minister Boris Johnson wanting a no-deal Brexit to President Donald Trump flexing his negotiation muscles. Then to local shores, where politicians who promote socialism are stealing from the poor. Global News Prime Minister Boris Johnson continued to be in hot water this…
Cape Town hosted the World Economic Forum on Africa this week. It was an opportunity for President Cyril Ramaphosa to show that South Africa is still an economic leader in Africa. This, however, got overshadowed by protests against violence towards women and femicide in the country. Other African countries also criticised South Africa for not…
There seems to be a measure of closure on the horizon to events that have occupied the news for the past two years and more – the Brexit deadline is on its way and Prime Minister Boris Johnson’s actions do not seem to indicate any intention of postponement; trade talks are being mediated; and plans…
President Donald Trump had a busy week of tweets and announcements. He cancelled a meeting with the Prime Minister of Denmark, Mette Frederiksen, because she said that he couldn’t buy Greenland; he said to reporters at the White House that “I’m the chosen one;” he said that Jewish people who vote for Democrats are disloyal,…
National Health Insurance (NHI), the Public Protector, Eskom, ANC infighting, Trump, Trade Wars, the Fed… the list goes on. These are all factors that have been impacting the rand of late and may continue to do so for the foreseeable future. The rand fell by 12% in 24 days from its intra-day low of R13.80/$ on…
It has been a mixed and volatile week. US stocks suffered one of their biggest single-day fall-offs this year in the middle of the week; there has been a lot of talk around whether a recession is on the horizon due to the prolonged trade war; and the first draft of the National Health Insurance bill was…
This week, President Donald Trump and Prime Minister Boris Johnson put the “boy” in “boisterous”. Both Leaders came out guns blazing with President Trump calling out the Chinese saying that China continues to “rip off” the US and adding additional tariffs, and Prime Minister Johnson has acted dogmatically in keeping his eye on Brexit’s October deadline.…
Several months ago, we wrote about Dynasty’s concerns surrounding Eskom, referring to it as the “the elephant in the room.” These views have come further to fruition as Eskom’s gargantuan weight on South Africa’s fiscal health is all the more evident. This week Moody’s issued a warning that additional bailouts to support Eskom are “credit…
Much of what has happened this week emulates the state of politics and government at this time. Meetings about meetings, bureaucracy and gridlock − the trade war between the US and China is continuing with stunted progress, the UK is making a no-deal Brexit next to impossible, and the Zondo Commission had its star witness,…
We’re halfway through the year, and there are few signs that the geopolitical volatility that has characterised the past three years will abate any time soon. The same headlines continue to spell uncertainty for the markets — Trump, trade wars and Brexit. Even so, equity markets worldwide enjoyed a strong quarter and first half to…
With the change to the exemption for foreign-earned income coming into effect on 1 March 2020, many expatriates are being advised to financially emigrate in order to ensure that they are not taxed in South Africa on their world-wide income. Such advice is not necessarily correct and will depend on the factual circumstances applicable to…
In my first two articles in this series, I described and evaluated the pros and cons of some of the most popular equity investment styles, including value, momentum, size and low volatility. This time, I’ll discuss the quality approach and how different investment styles influence our philosophy. Quality is an approach where the asset management…
The government introduced tax-free savings accounts (TFSA’s) in the 2015/6 tax year as a way to encourage South Africans to save more money. Since then, most financial services providers have added a range of tax-free savings products to their portfolios and many South Africans have embraced them as a tax-efficient way to invest. Unlike retirement…
A good news week! Many interesting and exciting things happened this week that could be small indicators for what the future holds. Christine Lagarde is set to replace Mario Draghi as President of the European Central Bank (ECB); the trade war between China and the US was placed on hold; and SARS is going after…
The G-20 Summit is underway. Although there has been a lot of commotion around the summit, it has not been about the summit itself but rather about President Trump, his threats, and the trade wars he is broaching around the world. President Trump said that if the US and China do not make significant progress…
President Ramaphosa gave an eloquent and inspirational State of the Nation Address ( SONA ) last night and although it is difficult not to feel proud of having a President like Cyril (especially when some are led by the likes of Donald Trump) the politics of it all are still baffling. We know that we…
Putting all the processes aside, it does look as though Boris Johnson is going to become Prime Minister of the United Kingdom. At least we are in for better speeches than President Trump but a similar boisterous attitude and hairstyle. Global News Boris Johnson is the front runner in leading the Conservative Party’s nomination in the…
It seems as though Ramaphosa winning the Presidency was a battle, and the war has only just begun. This week provided the South African populous an insight into how divided the ANC is. A prime example of this division came when Ace Magashule, the Secretary-General, of the ANC, made comments on expanding the Reserve Bank’s…
Deep divisions within the ANC remain We survived the election and the second wave of turbulence surrounding President Ramaphosa’s Cabinet announcement. Does this mean that there are blue skies ahead? There will be some turbulence and it will now take different forms that a full Parliament and Executive is in place. The Cabinet provides some…
We are in for an exciting week! On Sunday or Monday President Ramaphosa will announce his newly appointment Cabinet. The decisions made here will be a signal of his power and intention as President – so far it is looking good. David Mabuza, Deputy President, has not taken his oath of office and neither has Nomvula Mokonyane – Minister…
This week, trade war negotiations between America and China boiled over. Trump tipped over the pot, exiting negotiations and increasing tariffs. China has since retaliated. Theresa May has been asked to step down as Prime Minister and bookies are betting on Boris Johnson as her successor. Cyril Ramaphosa has maintained leadership of South Africa, and…
The election circus The election circus has come and gone with the advertising posters on light posts all that remains. There were lots of harlequins, clowns and jesters whose antics were neither funny nor entertaining. This may explain the disturbing 7.4% decline in voter turnout. Citizens were simply not amused. About 9 million eligible voters…
We await the final results of the General Election without bated breath. It seems that our predictions are going to be fairly spot on with little fluctuation in the polling numbers throughout the counting rally. At the time of writing, the polls currently stand at ANC 57.34%, the DA 21.05%, and the EFF 10.32%, and we are…
Brexit and the US-Sino trade war are in the news again this week, but we are more focused on our own General Elections taking place in just under a week on the 8th May. We have asked our consulting political analyst, Professor Ivor Sarakinsky, to contribute an exclusive article for our clients on his insights…
Ivor Sarakinsky has been Dynasty’s primary consulting political analyst for some years now, he teaches at the Wits School of Governance, has a PhD in Political Studies from the University of the Witwatersrand, and recently obtained his professorship. He has achieved much in his career — for example he was an expert for the ANC’s…
In South Africa, the campaigning to the lead up to the general election on the 8th of May is getting heated. There is concern over the election results as it is unclear whether the ANC will gain strong enough support from voters in order for President Ramaphosa to stave off the factional opposition within his Party to be able…
Inline with the spirit of Passover and Easter celebrations we are sending out the News Flash today rather than on Friday. This week was eventful both locally and internationally: Moody’s released their in-depth annual analysis on South Africa, the redacted version of Mueller’s Report may be released, and Notre-Dame went up in flames.
Local electioneering will continue to dominate the news cycle as the campaigning heats up ahead of next month’s elections. Expect to see increased service-delivery protests and the concomitant finger-pointing we saw in Alex this week.
Welcome to our update for the first quarter of 2019, which reflects a healthy recovery in local and offshore equity markets, following the downturn in the last quarter of 2018. The performance of the market over this period vindicates our approach of focusing heavily offshore, investing in quality funds and assets, and remaining invested in the…
A question that is often raised in estate planning is what to do about an inheritance left to children. While the definition of a child in the legal sense refers to the age of majority, being the age of 18 in terms of the Children’s Act, when we talk of children in the estate planning…
In my previous article in this series, I explored how retirement funding can help you to optimise your tax efficiency while enabling you to save for the future. In this article, I shall examine the role of living annuities as a tax-efficient vehicle for conserving capital and generating income during your retirement years
In my previous article in this series, I looked at the role of investment styles in how asset management firms pick stocks and shares. I also delved into the pros and cons of the value investment style. In this article, I’ll briefly look at some of the other popular investment styles.
Moody ’s will be releasing a report on whether or not they have decided to downgrade South Africa’s credit rating later today. There is concern over the possibility of a downgrade especially considering the recent load shedding from Eskom. Dynasty expects, on the balance of probabilities, that there will be a downgrade in the outlook of…
Due to tomorrow being Human Rights Day and it creating an unofficial long weekend, there will not be a News Flash on Friday, 22 March 2019, but we will be back to you as normal from the 29 March 2019 with our weekly summary. Below is a brief News Flash to keep you informed.
This week, the British Parliament voted against a ‘no-deal Brexit ’, American and Chinese leaders continue to quarrel over trade deal negotiations, the US Senate voted against Trump’s wall as some Republicans stood up to a bully, President Trump.
wThis week there were further developments in Trump Land regarding Paul Manafort, the trade war, and the denuclearisation of North Korea. It seems as though Eskom was riddled with corruption and will need a great deal of nurturing before it becomes a viable entity.
This week was a busy one for the Trump administration – President Trump had a summit with North Korea, heard Michael Cohen’s testimony against the President, and had to deal with the ensuing national emergency initiated by President Trump’s wall.
Tito Mboweni delivered his budget speech this week, presenting a bleak but frank assessment of what South Africa will have to do to fix our economy. As South African eyes continue to widen over just how much work there is to be done, it is good to reflect on how much worse things could have…
We will get to a day where we do not talk about Brexit, the trade war, or Eskom woes but today is not that day. Theresa May’s appeal has been squashed by the House of Commons, trade deal negotiations are largely stagnant, and Eskom has made South African’s realise that we weren’t nearly as pessimistic…
It has been a busy week as President Donald Trump delivered his State of the Union Address and President Cyril Ramaphosa delivered his State of the Nation Address. The impact of Ramaphosa’s SONA is unclear, as the rand pulled back along with other Emerging Market Economies.
January has come to an end and bought relief to investors as most of the loses of December were regained. The MSCI All-Country World Index recorded its best monthly performance since March 2016, along with the S&P 500 which had its best performance in 30 years.
This week has been filled with the inspiring insight of world leaders and forward thinkers in Davos, along with the uninspiring continued drudge of the US government shutdown (now on Day 35) and the Brexit negotiations.
The Government Shutdown in America is now the longest ever recorded. Theresa May is under pressure to coordinate a Brexit deal. Macron is trying to resolve the “yellow vests” protests. And China’s economic growth is set to lower in 2019.
Let’s look back at 2018, before considering why 2019 may well be a better year. Global equities ended 2018 down, with South Africa’s JSE experiencing an especially tough year. The All Share Index was down 8.5% in rand terms and 21.3% in US dollars, while locally listed property fell 25% in rand. Even traditional rand…
The tax burden on South Africa’s higher income earners has swollen in recent years, with this segment of the population facing a top marginal income tax rate of 45%, capital gains tax of 18%, estate duties up to 25%, donations tax at 25% and dividend withholding tax of 20%.
The old political year ended with spectacles of beach parties in Cape Town while the new calendar year begins with the ANC celebrating its 107 birthday. Both will shape the political landscape in South Africa in the build-up to the election in May and the ability of a new administration to act thereafter.
Most wealth and asset management firms have a set of overarching philosophies that guide how they pick assets and securities in which to invest. There are several dimensions that they will consider when they choose securities or assets on behalf of their clients – the active versus passive debate, local versus offshore, and tolerance for…
Dynasty would like to wish you a happy festive season. This will be our last News Flash of 2018 and we will start up again on the 11 January 2019 with our quarterly newsletter. Although we will be open throughout this period the office will be closing at 12:00 on the 24th and 31st December…
It has been a very volatile week but there are a few things that may encourage us to look at on the bright side. Trump and Xi Jinping are in negotiations to conclude the trade war; many indices have fluctuated this week but there was a strong recovery from the intra-day lows on Thursday; and the JSE ALSI,…
There is a possible culmination to the trade war this weekend as Trump and Xi Jinping, the President of China, are set to meet alongside the G20 summit in Buenos Aires. This comes on the back of dovish statements from the Fed which led the markets to discount fewer rates hikes for 2019. These two…
Ramaphosa’s Cabinet reshuffle, as anticipated by Dynasty, lacked substance – Bathabile Dlamini and Nomvula Mokyane still have their jobs, and the Cabinet continues to be bloated with redundant, corrupt ministers and deputies.
It seems as though an end to the Brexit conundrum maybe in sight. Although this has come with a fair amount of feather ruffling this week, it is only the beginning. This proposed deal is just the tip of the iceberg of further negotiations that will have to be meditated in the future. The question…
This week saw the results of the much anticipated midterm elections. The Democrats took the House and the Republicans maintained control of the Senate. This could initiate a lot of friction within American politics and could signal the end to the smoothest period of Donald Trump’s Presidency. As always, the President is handling this blow with dignity…
With the end of the year fast approaching, a lot has been happening in politics. Angela Merkel announced that she would not be running for re-election of the Christian Democratic Union of Germany Party (CDU); US Midterms and the implications of which are on our doorstep; the end to Brexit seems to be approaching; Global…
Fears of rising US interest rates and the impact of the Trade War have caused the markets to retreat heavily this month. The global market sell-off that started in late September continued this week, and the tide was only stemmed by positive earnings announcements from Twitter, Microsoft, and Tesla. The extent of the correction tested…
The most critical story for South African’s this week was the appointment of Tito Mboweni as the new Finance Minister after Nhlanhla Nene stepped down. This will make him the fourth Finance Minister that we have had in two years. While this was happening, hurricanes hit both land and financial markets.
As we move into the last quarter of 2018, we are comfortable that the latest developments in global financial markets validate our investment approach. Though there has been some turbulence in the year to date, we have seen strong growth in developed world equity markets which have delivered robust returns. Right now, we are seeing a…
Growth assets disappointed in the recent past. It is understandable that some investors may want to give up. But only looking backwards may lead you to the wrong conclusions. Recent Outcomes Were Weak Recent experience has planted doubt in the minds of some investors as the risk-return trade-off did not hold. The truth is that…
In my first article in this series about behavioural investment, I looked at some of the cognitive biases and emotional responses that prevent investors from optimising returns from their portfolios over the longer term. I mentioned the cognitive bias of ‘loss aversion’, the human tendency to avoid the possibility of losses today even at the…
Some Friday inspiration: This week the Daily Maverick published an article called #GuptaLeaks: From cloak and dagger handovers to the Zondo Commission – a hard drive’s journey like no other written by Jessica Bezuidenhout. It recounts the process of revealing the #GuptaLeaks to the South African public and boils down to two people who exposed the…
The week was one of mixed news and some non-starters. After a lot of trade war rhetoric, the international market reacted in a relatively docile manner; there have still been no decisions regarding Brexit; and the rand gave up some of the week’s gains in the wake of Cyril Ramaphosa’s stimulus package.
There have been a few revelations in the Zondo Commission this week. The Gupta’s have been denied their request to testify by video-link and will be forced to return to SA, Jacob Zuma has said that he is misunderstood and will co-operate with the State Capture Enquiry, and Duduzane Zuma will be allowed to cross-examine…
The news that South Africa has moved into a technical recession has rattled the rand and the local stock market at an already volatile time. As we survey the market, we find it helpful to look at the circumstances causing the rand to weaken as well as what has happened in other periods of rand…
The rand lost 12.5% in a week, and the GDP number was expected to be +0.6 and came out at -0.7% in the midst of an Emerging Market sell-off. South Africa is now in a technical recession and to add to it SA recorded a gaping R4.6 billion deficit. President Ramaphosa has reassured that this…
With the possibility of a no Brexit deal becoming ever more realistic Theresa May has made her way to Africa, visiting Kenya, Nigeria, and South Africa. This has revealed a new tactic in Britain’s trade policy, promising investment and opportunities in a new continent to counter the effects of Brexit.
Following the turbulence of the UK Brexit vote and the election of Donald Trump as the president of the US in 2016, the geopolitical climate has shown few signs of settling down. The rise of a populist government in Italy, heightened trade tensions between the US and China, and a currency crash in Turkey are…
Despite the positive news for South Africa on the political front with Shaun “the Sheep” Abrahams being asked to leave as head of the NPA, this week was a bitter pill to swallow for South Africans as the rand plunged against the US dollar and Moody’s gave us a reality check.
This week has been momentous for our small part of the southern hemisphere. Cyril Ramaphosa announced, in the middle of the night, that the ANC will be making changes to our constitution regarding land expropriation without compensation and the Zimbabwean election results came out to riots and police shooting live ammunition.
This past week saw bureaucracy at its best. From the BRICS summit in South Africa to the EU and America deciding to leave their trade relationship essentially the same. Theresa May continued to battle with the woe that is Brexit, and Zimbabweans are all set to have their first truly democratic election on Monday.
Almost every day this week Trump has flip-flopped on what he said the day before. The US has been shocked by the performance of their president at a summit between Putin and Trump in Helsinki on Monday – more details to follow in the News Flash. This culminated yesterday in Trump extending an invitation to…
In just a couple of days Trump has criticised Angela Merkel, Theresa May, and NATO as a whole and showed his affiliation towards Russia and Putin in particular. He did not however, amidst rumours, remove the US from NATO all together, thankfully.
In our newsletter for the first quarter of the year, we commented on renewed optimism in the South African markets as we basked in the glow of Ramaphoria. But the second quarter has brought us back to reality, with the rand now down 19% against the dollar compared to the R11.50 February levels and with…
A question I commonly encounter from persons with foreign trusts (the Applicant) who applied for relief under the recent Special Voluntary Disclosure Programme, 2017 (SVDP) is, “should I keep the trust?” The answer to this question, in my view, lies in understanding the benefits of the trust during the lifetime of the Applicant (if any)…
The good news is that we can all improve our decision-making when we understand the mostly unconscious thought processes that lead us to make poor choices. One of the most common mistakes we see, even among well-informed and sophisticated investors, is the pursuit of quick wins and the aversion of short-term losses rather than adhering…
There is heightened concern around the world this week, again, regarding a global trade war and the potential impact it could have on economic growth. The net effect of Trump’s policies, should they last, and the universal retaliation will be negative, with no real winners.
The biggest news story from this week has been Trump’s flip-flop on his “zero tolerance” policy regarding children being separated from their parents at the US border and then having them held in detention centres. After a massive public outcry, as well as the apparent influence from his wife and daughter, Trump has signed an…
Internationally this was a momentous week. Donald Trump removed America’s support from the G-7 Summit Statement, creating tension with some of America’s most powerful allies. Trump also met with Kim Jong-un, the first time an American President has met with a leader from the Hermit Kingdom.
This week left most South African’s shocked as the GDP results for the first quarter of this year shrank unexpectedly by 2.2%. This was due to a multitude of factors, partly because of the falloff in the resource sector. Additionally, it has influenced the relatively volatile week, as the rand weakened, hitting R13.25 to the…
Michael Power, a strategist at Investec, has written an interesting piece on what he considers to be the Fourth Industrial Revolution to be (it is not AI). He says that every such Revolution has been linked to a power source – steam, electrical, computer – and so the Revolution would be driven by access to…
Energy drives industrial revolutions The Fourth Industrial Revolution is coming in the next decade, and no, contrary to the breathless rhetoric of the likes of the World Economic Forum, it is not centred on robotics and artificial intelligence as significant as these advances are. Rather, as with all previous such revolutions, it will be driven…
It is interesting to see the international political environment unfold. The US has gone from a country that was the leader of international diplomacy and has turned towards isolationism and protectionism. While Russia and China, traditionally isolated countries, are coming to the fore of negotiations, communication, and diplomacy. Is this potentially a foreshadowing of future…
It is a condition of our time that the US dominates the international news. It seems that other countries only make the news in terms of their relationship with the US – Russia, China, Britain, the EU, Israel, Iran, North Korea, South Korea, Mexico, even South Africa. Dynasty Thought Leading “Looking for long-term returns in…
To quote Berkshire Hathaway’s Warren Buffet, who has delivered strong and consistent returns throughout more than half a century of bear and bull markets: “The world was uncertain on December 6th, 1941, we just didn’t know it. The world was uncertain on October 18th, 1987, we just didn’t know it. The world was uncertain on…
It could be perceived that Trump is aiming to bring America to war. A few months ago, during the nuclear to and fro between America and North Korea (or rather Donald Trump and Kim Jong-un), Trump hit back with nuclear threats rather than being diplomatic. Now that North Korea has opted for peace, Trump has…
The news this week was a melting pot of world events. The Fed maintained rates; Trump is in more trouble, facing Robert Mueller and Stormy Daniels; Theresa May continues to have Brexit woes; allegations were made that Iran acted against the nuclear deal; and Cambridge Analytica is facing closure. Locally, Trump did not exempt SA…
This past week saw the potential for peace after a 67-year war; a launched satellite to find extraterritorial life; President Ramaphosa announced an investment task team; and racism was called to order.
In my previous three articles in this series, I have outlined the pros and cons of passive, active and smart beta investment strategies. Dynasty believes that an optimal approach to managing portfolios is to blend all three strategies in a manner that optimises returns in the longer term while mitigating the risks of following just…
The buzz around smart beta funds is growing worldwide as investors look for a nuanced alternative that brings together the benefits of actively managed funds and passively managed funds (see my articles on the advantages and disadvantages of passive investing for some background). Smart beta funds aim to beat the market by blending elements of…
If Donald Trump completes his two terms as president, what will the political landscape look like in 7 years? In his first year alone he has caused loud, clumsy chaos, and more recently a potential trade war with China (which seems of his own accord since his cabinet continually tries to quash its potential). Will…
Ryan Page – Director at Dynasty Asset Management Investment in passive funds is growing at a rapid pace in South Africa and the rest of the world as investors look to accelerate their returns, control risk and minimise management fees. Though passive funds account for a relatively small portion of assets in South Africa, this is expanding…
There are few issues more contentious in the investment world than the debate about whether passive or active investing is better. Most wealth management firms and investors tend to prefer one of the two strategies, with passive investments in fashion because their management fees are perceived to be low. In this series of articles, we’ll…
What a difference three months can make! In our previous quarterly newsletter, we discussed the underperformance of the South African stock market relative to its global peers, as well as the possibility of worse to follow if Nkosazana Dlamini-Zuma won the ANC presidency in the ANC elective conference in December.
In 2017, the Nobel Prize for Economics was awarded to Richard Thaler, who is an American economist and the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago’s Booth School of Business. In many quarters, Thaler was a controversial choice. For some in the profession, the idea that…
A potential trade war was initiated between the two largest economies in the world. Donald Trump introduced $50billion of trade tariffs against China. So far China has retaliated with a measured response of $3billion in counter-tariffs, the EU and Britain are lining up their defences as well. It would seem that a great America under…
Since Trump has come into the presidency, the news seems to be constantly US-centric. Although this is frustrating it seems to be a condition of our times. Week to week sensational news spills from the US, for instance just in this past week – Trump fired his Secretary of State; his National Security Adviser seems…
As a South African, there is an awareness of the overwhelming task to establish economic stability but the thought is becoming possible again. It is satisfying to see the cogs start to turn after being dormant for some time – 27 renewable energy projects are being reinstated next week; the land expropriation debate is calling for good arguments and…
This week, Ivor Sarakinsky (PhD) has written a contributing piece for our readers analysing Ramaphosa’s Cabinet reshuffle. There have been many other developments this week – Trump has suggested some level of gun control and has also proposed steel and aluminium import tariffs; the Brexit negotiations have developed in their stagnation; and Vladimir Putin has confirmed…
Brace yourself! The ANC’s transition is over. Zuma is out of office, the ANC has a new leader, and South Africa has a new President who has appointed a new Cabinet. Surely political dynamics will now stabilise, and we can all now get on with our lives and business. Two of the ANC’s Top 6,…
We are in a time where so much is happening – reading through information on the SONA seems outdated, but it was only last week Friday that it was presented! Since then government has re-iterated that we cannot afford nuclear power, cutting the nuclear deal at the knees; VAT is increasing for the first time in 25…
By raising South Africa’s VAT rate from 14% to 15%, the South African government indicated a willingness to take difficult (and unpopular) decisions in order to stabilise the fiscus. Coupled with the recent change in the President, this Budget should be enough to keep Moody’s on hold when they release their South Africa sovereign review…
President Cyril Ramaphosa delivered his first SONA speech on Friday. There is still a lot being finalised – the Gupta’s are on the run, Zuma’s future is uncertain, but, Ramaphosa has already suggested adjustments to the mining charter, encouraged international investment, and highlighted the need to reduce South Africa’s high unemployment rate.
South Africa has been in a state of suspense for the week. Ramaphosa has been in negotiations with Zuma regarding Zuma’s departure but whether or not this will happen is unknown.
The Trump administration is threatening to release a memo implicating the FBI. It seems like a short-sighted move on the part of the presidency but looks like it will go ahead. In South Africa, Capitec had an encounter with Viceroy Research, ANN7 is no more, and Ramaphosa admitted that SA cannot afford nuclear power.
There has been a lot of positivity surrounding South Africa’s future lately. Cyril Ramaphosa is wooing the world with his charm, realism, and charisma in Davos. Aspects including Goldman Sachs commenting that SA is the emerging market to watch out for in 2018 and Brian Molefe having to pay back his unlawful retirement settlement, are signs that we…
South Africans are one of the most politically aware populations in the world, and it is no wonder. From a possible presidential recall (it would be the second one in a row for the ANC) to the shenanigans and deception of the DA in Cape Town. Hats off to South African journalists for keeping their…
A satellite launched from SpaceX disappeared, cryptocurrencies remain volatile, and South Africa’s politics is consistent in the dramatic. Keep reading for more of what has been happening over the past few weeks.
No matter how hard one shakes, oil and water will always eventually separate. The two ingredients are by nature incompatible. This analogy describes the outcome of the 54th ANC Electoral Conference. The Top Six is almost split down the middle and the National Executive Committee (NEC) is exactly split down the middle. The proclaimed Unity…
At last, the results of the eagerly-awaited ANC Conference are in. While we await the results of the election of the National Executive Committee, the Top Six outcome gives a clear indication of where the ANC is going.
This will be our last News Flash for 2017, which we will commence again on 12 January 2018. We hope that you have enjoyed this weekly addition to your correspondence from Dynasty. Again, if you have any suggestions or feedback, we would appreciate hearing from you.
A day before the start of the ANC’s 54th Electoral Conference and there is still little evidence upon which to predict the outcome. At one level, this ought to be how democracy works. At another level, the uncertainty in this case is significantly driven by the real possibility of procedural irregularity and the bribing of…
This News Flash casts a spotlight on private sector practices in South Africa – from MultiChoice, to Naspers, to SAP, to Steinhoff – we are well aware of the prevalence of corruption in our state institutions, but our private sector has been allowed to point fingers for some time. It is positive that mismanagement and corruption is being revealed and practices questioned across the board.
The last US Presidential Election demonstrated a curious feature of democratic politics. Hillary Clinton, with the majority of votes, lost the US Presidency to Donald Trump who had more voting delegates. There is a real possibility that Cyril Ramaphosa (CR) might be left in the cold after the ANC Electoral Conference later this month. Electoral…
The South African Federation of Trade Unions (SAFTU) reacted angrily to the rating agency’s decision to downgrade on Friday 24 November stating, “It is outrageous that these unelected enforcers of the big multinational monopoly corporations can wield such power…” Unfortunately, we can stomp our feet as much as we like, but while we are reliant on…
The global economy is firing on all cylinders. Though 2016 and 2017 have been politically tumultuous, growth remains robust and international investors are still showing an appetite for risk. Investors in Japan, North America, Europe and emerging markets should all be pleased with the returns they have experienced in 2017 so far. In North America,…
As the ANC’s Electoral Conference looms ever closer, the political environment becomes increasingly more uncertain. Fearing fear, as noted by Roosevelt at his presidential inauguration, may now camouflage the dynamics surrounding South African politics.
We at Dynasty are increasingly being requested by clients to pass an opinion on Bitcoin. In our view, the Bitcoin hype is directly correlated to the sharply appreciating trading price. The more it goes up, the more it sparks the public’s interest. We came across the following article from a respected, senior fund manager at Coronation, Neville…
Most people sign a Will as they have been informed that it is necessary to have a Will and to nominate an Executor and heirs but unfortunately, most people leave the process at this point and do not regularly review the document once signed.
The South African rand has been under microscopic focus for most of 2017, with a few periods of respite. Though some commentators – and some indicators like the Big Mac Index – suggest that the rand is undervalued at current levels, we feel that South African investors should prepare for the currency to continue declining…
The last two weeks have been quite a roller-coaster for Southern Africa. We saw the non-coup/coup in Zimbabwe rise and succeed in peacefully removing Robert Mugabe, South Africa lost their bid for the 2023 Rugby World Cup, and there have been shifts in the right direction in terms of our own captured structures.
There is much confusion over the current state of Zimbabwe, South African journalists are being held at the border, and the information that is coming out of the country is questionable. In other news, Treasury Budget Chief, Michael Sachs, resigned this week after ten years of service.
The Paradise Papers have exposed royalty, politicians and rock stars alike. After two of Trump’s ex-aides were implicated in the Russia probe, the Paradise Papers have shown further links between Club Trump and the Russians. In other news, the Saudi Crown Prince has arrested royals, ministers and businesspeople in an anti-corruption purge – could something similar…
Last week Friday, 27 October 2017, American tech had an incredible day with the Nasdaq Top 100 companies adding $200 billion in market cap. Amazon, Microsoft, and Alphabet Inc. were some of the big performers. The South African ALSI had strong returns, but it may not be as healthy as it seems.
The mid-term budget speech was met with widespread disappointment. The numbers were worse than expected, economic growth forecasts decreased, the consolidated budget deficit widened, the nuclear deal was not addressed, and neither was the continuous bailing out of State Owned Enterprises – there is a concern that the rating agencies may downgrade us as a…
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).
Internationally, there have been Brexit ball games and the ambiguous possibility of Catalonian independence. Locally, there are concerns over Gigaba’s interim budget allocations to State Owned Enterprises. We also outline below, the Dynasty house-view on the positioning of our domestic portfolios ahead of the ANC Elective Conference in December.
Fresh debate about gun control in America after a horrific mass shooting in Las Vegas. In South Africa, the countdown continues to the ANC’s elective conference in December. Read on for more:
Over the last week, the bizarreness of Trump continued, from tax cuts for the rich to embarrassment at the UN General Assembly; Angela Merkel has kept her position as Chancellor of Germany; and an ex-CEO of Trillian has become a massively valuable whistle-blower in the case to expose South African State Capture. Catch up on…
London terror attacks and tensions around North Korea spell another week of international turbulence. Gupta scandals put South Africa in the international headlines for the wrong reasons. Read on for more:
South Africans were cheered by the country’s emergence from a technical recession and a victory against Bell Pottinger, while Hurricane Irma and tensions between the US and North Korea dominated international headlines. Read on for more:
This week, Hurricane Harvey caused chaos in Texas and South Africa’s ALSI Index reached new highs despite the strength of the rand. For more economic news, continue reading.
US President Donald Trump bemused and annoyed the world at large again this week by saying white supremacists and left-wing counter protesters were equally to blame for the violence in Charlottesville. Read on for more local and international news.
Nazmeera Moola, economist and strategist at Investec Asset Managment, analyses the cost of Jacob Zuma’s Cabinet Reshuffle, four months after the fact.
There’s one word that defines the investment climate today, and that’s uncertainty. Emerging markets remain as volatile as ever – whether it’s the slide towards authoritarianism in Turkey, corruption scandals in Brazil, North Korea testing nuclear missiles or motions of no confidence in South Africa. If that wasn’t enough, there’s upheaval in the rich world,…
Alongside Venezuela, South Africa is one of the few countries that is not part of the longest phase of synchronised global growth we have seen for a good while. Jeremy Gardiner, a Director of Asset Management at Investec, told Dynasty clients at an exclusive presentation that this reflects that many of South Africa’s problems are domestic…
President Jacob Zuma remains in office after surviving the motion of no confidence vote last week. The US and North Korea had a bizarre to and fro of nuclear threats only to have Kim Jong-un reply diplomatically – this appeared to please Donald Trump. Continue reading for a roundup of the past week’s news highlights.
Investors should expect uncertainty to prevail in South Africa beyond the parliamentary vote of no confidence in President Jacob Zuma taking place today and the ANC elective conference in December this year, according to Trevor Manuel, South Africa’s former Minister of Finance.
White House Communications officer, Anthony Scaramucci, was last week removed from his job after just 10 days – he is one of 10 people who have resigned or been fired from their position in the Trump Administration. Keep reading for more weekly highlights.
This week, the IMF released new international growth forecasts, the Republicans tried yet again to repeal Obamacare, and the South African Reserve Bank cut the repo rate by 25 basis points.
The newly introduced section 7C of the Income Tax Act (“the Act”) applies to any loan, credit or advance granted directly or indirectly to a trust by, inter alia, any natural person, who is a connected person to the trust, where the loan, credit or advance is not interest-bearing or where it bears interest at…
Trump dramatics and Brexit negotiations dominated international headlines; in South Africa, the Public Protector’s recommendation that the government changes the Reserve Bank’s constitutional mandate continued to make waves.
A week of turmoil in South Africa, the Public Protector recommended that the government changes the South African Reserve Bank’s constitutional mandate. Markets tumbled and the rand lost +-1.6% against the dollar.
With all the talk of radical economic transformation in the air, wealthy and middle-class South Africans should almost certainly expect the taxes they pay to rise over the next few years. This will build on the trend of the previous two Budget Speeches, which offered little in the way of tax relief for anyone but…
Qatar’s neighbours commissioned sanctions against the country, Comey stood up to US President Donald Trump, and Moody’s downgraded South Africa’s credit rating a notch – it’s been another busy week at home and abroad. Global News Qatar has been isolated by land, sea and air in a coordinated diplomatic move taken by other countries in…
This has been a week of shocking events: terrorist attacks in London, US President Donald Trump’s decision to pull out of the Paris Climate Change Accord, and an email leak in South Africa that has surfaced new information about the Gupta family’s dubious relationships with state enterprises and with key politicians. Read further for more…
South Africa was rocked this week by leaked emails providing further evidence of the Gupta family’s influence over President Jacob Zuma and his family, key cabinet ministers and the boards of state-owned enterprises. Even so, President Zuma survived yet another attempt to remove him from his position at an ANC NEC meeting last weekend. Global…
The deadliest terrorist attack in the UK since the 2005 London bombings took place yesterday at an Ariana Grande concert – 22 people have died and 59 have been reported as wounded.
Markets this week are dominated by the scandals currently rocking US President Donald Trump —including the firing of FBI Director Comey and allegations that he leaked highly classified information to the Russians. President Trump’s unpredictable behaviour and low approval rating mean that he’ll be the major market mover for some time to come. Global News…
Markets have remained resilient during the first few months of 2017, especially compared to the turbulence that 2016 brought with the shock election of Donald Trump as president of the US and the UK’s referendum vote to the leave the European Union. Investors have shown a strong appetite for stocks and emerging market assets are…
More than a month has passed since President Jacob Zuma removed Finance Minister, Pravin Gordhan, and several other ministers and deputy ministers from their posts in a dramatic midnight cabinet reshuffle. Yet the rand has remained relatively resilient following this unsettling political event—trading today at stronger levels than it was at the beginning of the…
The rand has held up well in recent months, despite political volatility and the downgrade of South Africa’s sovereign credit rating by two rating agencies. This has prompted new finance minister, Malusi Gigaba, to say that Jacob Zuma’s reshuffle of his cabinet has not had much impact on the rand or South African markets. However,…
S&P and Fitch downgraded South Africa’s credit rating this week to ‘junk status’, both citing President Zuma’s cabinet reshuffle for their unscheduled decision. The rand is now the world’s worst performing emerging market currency, after being the best performer in the first few months of the year. Global News Over the past ten days, the…
We said that last week was politically charged; this week was even more so. On Thursday, President Zuma reshuffled his cabinet without consulting the ANC’s Top 6, in turn causing upheaval on the markets and in the political landscape. S&P has downgraded South Africa’s sovereign credit rating, the rand has tumbled, and the ANC may…
As you will almost certainly be aware by now, Jacob Zuma finally showed his hand last night with the cabinet reshuffle, including the firing of Pravin Gordhan and Mcebisi Jonas. There is no window-dressing in terms of this move – it is a dire and blatant action to remove the barriers that the patronage faction…
This week has been politically vibrant. From Trump stepping away from his proposed health care plan sighting, “Nobody knew that healthcare could be so complicated” opting to move onto tax cuts. To Zuma recalling Pravin Gordhan from an international investment roadshow, amongst alarmed whispers of a cabinet reshuffle and the removal of the Finance Minister.…
The biggest issues of the last week were the fact that precious metals got sold off due to dollar strength and the upcoming Fed meeting on Wednesday – where there is a strong suspicion of a rate hike. South African politics is currently as colourful as ever with politicians tap dancing around the blame conspiring…
Global News: The MSCI World Index has gained 0.4%, over the past week, while the MSCI Emerging Market (EM) Index fell by 1%. Since December 2016, the EM Index has risen by 13.4%, all in US dollar terms. In the US, shares continue to surge in reaction to Trump’s speech last week, strong consumer confidence,…
Global News: In 2017, the MSCI World Index has gained 5.4% in dollar terms while the MSCI Emerging Market Index has returned 9.5%, also in dollar terms. The JSE ALSI has returned 7.8% in dollar terms, so balancing in-between the two numbers. In the UK, the Office for National Statistics released their 2016 GDP fourth…
Global News: In 2017, the MSCI World Index is up 4.8% in dollar terms. The MSCI Emerging Market Index has gained 8.9% in dollar terms – this is its highest level since July 2015. The S&P500 Index has returned 5% in dollar terms in 2017 – this index has gained 12.8% since its low just…
In January 2016 South Africa was in the grips of a terrible drought with “no sign of abating”, and the South African Weather Service had just declared 2015 the driest year on record. While the rainfall has come, crops are shooting, with a bumper harvest now anticipated, we still have water restrictions in Gauteng and…
Global News: The global developed market MSCI World Index, has returned to its previous all-time high from May 2015. So far in 2017 the index has returned 3%, in US dollar terms, and it is up 22.8% from its low on 11 February last year. In the US, the MSCI USA Index is at an all-time…
Global News: In the US, Donald Trump will be inaugurated as the President on, Friday, 20 January 2017. In China, import growth gained 3.1% year-on-year indicating healthy Chinese consumption, but export growth fell by -6.1% year-on-year. The CSI 300 Index, the Shanghai and Shenzhen stock index, was down -0.9% for the week and the Japanese…
Global News: In the US, share prices are at new highs – promoted by the strengthening economy, consumer confidence, anticipated profits and reduced taxes. US factory orders saw an increase that was slightly higher than expected at 2.7% month-on-month in October; it was expected to gain 2.6%. Overall, orders rose by 1.3% year-on-year, this is…
Global News: The MSCI World Index is just -1.3% from its record high, in dollar terms. It is 19.3% up from its low on 11 February 2016. In the US, Markit Composite Purchasing Managers Index (PMI) is at a healthy 54.9. The growth of durable goods orders was expected to be 1.7% but came in…
Global News: We have seen Mexico’s currency fall sharply since Trump was elected. The euro itself is trading near its lowest level versus the dollar in 13.5 years at $1.063 to the euro (hit $1.60 in 2008 and $1.50 in 2011). The Chinese currency is down -6.4% against the dollar so far in 2016, at…
Global News: In the US, it was thought that the markets would stumble in the event of a Trump victory. In actuality, they have performed relatively well. The stock markets had their best performing week in two years. The S&P 500 Index increased by 3.8%, the Nasdaq rose 3.8%, the smaller-cap Russell 2000 index increased…
We are currently facing a very challenging time as investors, where we are experiencing low returns and an adverse set of circumstances. We have referred to this kind of environment as “Slow Poison”, while a fund manager of ours recently related to it as being, “sand-papered to death”. When the risk that investors take for…
‘There is a Chinese curse which says “May he live in interesting times.” Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history.’ – Robert F. Kennedy in his Day of Affirmation Address in Cape Town, South Africa,…
Just when we thought it was safe to confirm that things had settled into a “new normal”, it seems perhaps they had not, the “old normal” is back and, to quote a cliché, the only constant is change. For a number of years, we had settled into a rhythm whereby commodity prices were declining, the…
