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Economic pressures

Standard Bank is closing 91 of its branches and retrenching staff and unfortunately, Edcon, who has received a 2.7 Billion Rand injection from PIC, will still be downsizing its stores.

Impact of Load Shedding

Eskom’s load shedding initiative is also having a huge financial impact, which may add to more job losses. If we move to stage 5 and 6, production will fall further and the effect will worsen our economy. 50 Billion Rand has been set aside for the next five years maintenance and with winter approaching, when usage is higher, so a solution needs to be found now.

Some light in the darkness

On the positive side, the JSE has hit positive territory creating good gains in the equity sector, with most Reg 28 funds achieving above 4% year to date. This is a little surprising considering the load shedding and job situation, but may be on the back of the Fed pausing interest rate hikes and global governments taking a different stance of interest rates.

Elections & Politics 

South Africa is not the only Emerging Market about to enter elections, with Thailand and Indonesia also starting the process. I believe the elections will bring more certainty for foreign investors and with that more stability. On the political scene, Theresa May is having a challenging time, the Brexit deadline nearing and no agreeable solution currently in place. This will more than likely result in an extension, but not later than 23 May as that’s when the EU enters their own elections.

Reflecting on the year to date, investors who remained in the markets from last year would have benefited from the recent surge. Bonds and cash still offer decent returns but are not long term instruments in terms of above-inflation targeting. Property has some pockets of value offering but also has many wary investors holding back.

Is your portfolio geared correctly for a crash?

Stringfellow continues to monitor the increasing volatility within Global Markets and we believe investor portfolios are presently at high risk if not properly managed through the next investment cycle. If you are an investor you are likely concerned with the markets. We would like to engage with you and offer our inhouse solutions built with Smart Portfolio Construction.

Commentary provided by:

Troy Laas, Senior Financial Advisor and Key Individual at Stringfellow Advisory Services

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