Investors urged to maintain perspective amongst negative, highly charged noise
Land expropriation without compensation could have positive outcomes and may not be as scary as it sounds. Rather, South Africans must acknowledge that the issue has become an important symbol for our country and it must therefore be addressed, and soon. It will all come down to the specific wording.
This was the message given by keynote speaker, Max du Preez, to a gathering of industry investors at the first annual Nedgroup Investments Multi-Manager Investors Day hosted at Summer Place on Wednesday 22 May 2019.
“It’s now a given that the wording in the constitution around this matter will be changed – and it will be the first time the constitution has been changed since democracy in 1994. But I believe that if this matter is addressed correctly, it will send a positive and important message on an issue that has become symbolic with the great struggle of the South African democracy. The detail will be in the legal process of changing the wording and we must rely on the process to achieve a positive outcome,” says du Preez.
Trevor Garvin, Head of Multi-Management at Nedgroup Investments said the conference was an important opportunity to provide South African investors with important perspective in terms of the investment environment.
“There is a huge amount of uncertainty right now – and to go with it, a huge amount of noise. We know that South Africans are by nature very cynical investors and it’s at times like these that maintaining perspective is crucial. It’s our job, as investment managers to not only make sure we are protecting portfolios in times of market downturns, but also that we are protecting investors from irrational investment behaviour based on emotions and knee-jerk reactions to events happening around the world. We hope that conferences like this will achieve that,” said Garvin.
Other views presented on the day included a very subdued economic overview from senior Nedbank economist Nicky Weimar, who warned that South Africa desperately needs much faster employment-creation growth and that much of the burden to create this growth is on the private sector: “Fixed private investment is the key to a more prosperous, more equal South Africa. But without addressing the current barriers to business holding private companies back from investment, this is likely to remain low and slow for the foreseeable future.”
Nedgroup Investments fund manager, Anthony Sedgwick provided a similarly cautious outlook for the small and medium cap equity market, while Ian Anderson, fund manager of the Nedgroup Investments Property Fund contested that, although the headwinds for the South African Property market are real, they are very well known and already priced into valuations. He proposed that it was possibly time to start increasing again ones domestic property exposures across portfolios.
Garvin echoed this sentiment: “From history we know that the main driver of future returns is current valuations. Valuations seem to indicate that the next five years should be better, and it’s important that investors don’t purely get caught up in the current negative sentiment, but rather look through it and past it for the next five to seven years.”
Representing Mazi Capital, Malungelo Zilimbola urged the audience to support South Africa Inc. in what he calls “Rhamaphosa’s New Dawn”. “We South Africans are a resilient bunch. We have been here before. There are many South African companies doing great things out there – in Africa and globally and if we find the correct opportunities there is a lot of value to gain,” he said.
Garvin says the intention of the day was to showcase the spectrum of decisions that fund managers take into account when constructing a portfolio and to stress the importance of maintaining a three-dimensional view of the investment universe. In addition, the day provided wealth planners with a sense of the multi-manager process that we follow, our current thinking and a range of both domestic and global managers that we currently invest with across our multi-asset class portfolios.
While the topics of economic growth and of course land distribution dominated, there were also some interesting updates from legal experts, education leaders as well as passive fund managers and offshore managers.