House News:
Over the past quarter the Finlaw team have been actively engaged in a total revamp of our website which can be found at http://www.finlaw.co.za [or simply Google “Finlaw Consulting”]. Here is a snap shot of portion of our new home page …
If you visit the site you will probably notice that almost all the pictures are from our natural surroundings with landscapes from as far afield as Antarctica, animals and birds from Africa. Not what you may expect from a financial services company – but chosen deliberately to distinguish ourselves from other service providers and to remind us all of the wealth there is in the wonderful world we live in.
We hope you will spend some time reviewing the site and we look forward to your feedback and suggestions. We will be adding more “Tricks and Traps” as useful guides to folk about Investments, Assurance, Tax, Residency, Citizenship and other topics of interest.
We have also joined the social media platforms of LinkedIn [a Global Professional network] and Facebook. You will find the links to these at the top right corner of our website pages. If you already belong to LinkedIn or Facebook – please click to “follow us” or “like” us so that you can receive our periodic updates.
The markets in the last quarter:
Our local SA share market had a particularly volatile time between 1 March 2013 and 31 May 2013. It had dropped by 5% midway through the quarter and then recovered almost 11% to close the quarter up by 5,93%. Certain sectors like mining and listed property were punished in the last part of May 2013 – coinciding with a sharp withdrawal by foreign investors from our market and resultant rapid decline in the value of our ZAR. Our local Bond market also suffered a sharp decline as foreign investors’ regained confidence in their own markets and “returned home” [see below].
By contrast, happy times abroad – the US Share market measured by the S&P 500 enjoyed a remarkable quarter growing by 7.80% in US$ in a period of just three months. The “troubled” European market measured by the Euro Stoxx 50 grew by 7,79% in Euros. The UK Market [FTSE 100] with all its problems was up by 4,49% in GBP over the quarter. For South African ZAR investors in these markets their local currency returns on these indices were 19.44% [US], 19.21% [Euro] and 16.93% [UK].
Our beleaguered currency:
The vagaries in our Rand over time make it really difficult for both importers and exporters. Their profits are impacted constantly unless they bear the relatively high cost of continuous currency protection. Here is a snap shot of what the ZAR has done relative to the US Dollar in the past 5 years.
The ZAR has swung from a weak point of R11,79 in December 2008 through to R6,57 at its strongest and back to a weak R10,09 at the close of May 2013. Remember these are the spot rates in the market and not what your bank will give you – which is worse by several percent on either side. Note the extreme volatility throughout the graph.
Conclusion:
While there remain many business opportunities in South Africa, prudent long-term investors cannot afford not to diversify their investment risk by including offshore exposure in their portfolios. It is likely that our currency will remain fairly weak for some time – with greater potential to slide even further in the coming months than it has to strengthen markedly. We expect the currency to trade between R9.50 and R10.50 barring any sharp turns in global events over the next quarter.
As always please don’t hesitate to contact us for assistance.