A Gazillion GNU’s…
As the year hurtles towards a close, we reflect on a particularly eventful year at home and around the World. Our May elections produced a business-friendly GNU far removed from the populist, investor-unfriendly government we might have ended up with. In celebration, a photographic safari was arranged to the home of the World’s greatest population of gnus – the Masai Mara triangle.
There are reportedly over one and a half million of these animals that migrate North and then South every year following the rains. They were all around us in their tens of thousands, infiltrated by smaller pockets of zebras, Thompsons gazelles, and eland. A spectacle well worthwhile including as a destination in Africa to get a sense of what it must have been like many centuries ago before the intrusion of so many humans.
Of course, we Safricans prefer the term “Wildebeest” for an antelope which is uniquely African. They certainly won’t win any beauty contests and at first seem to be intellectually challenged – but give them credit; they have proliferated over the years despite the odds stacked against them. Watching them charge across the Mara River in numbers, losing some along the way to the ever-present predators, is exciting, inspiring, and perturbing all at the same time. The Zulu word for a Wildebeest is nkonkoni, which is also used to denote a champion or leader in any field. Let’s hope that term can be applied to our Political GNUs and can keep them as tightly packed as the animal gnus!
It’s time for some blue sky…
I’m sure many of you follow the perpetually positive writings of JP Landman. Here’s some worthwhile quotes from his November Newsletter:
“In 2023, total investment in the country amounted to just over R1 trillion. Total GDP was just over R7 trillion, which means investment came to 15% of GDP. It comes to R114 million per hour, every hour, for 365 days of the year!”
He goes on to highlight the ever-expanding role of the private sector in our economy – including areas that were monopolized by government. He points out that investment is usually comprised of two-thirds from the private sector and one-third from the public sector – but the split now stands at 71% and 29% respectively.
The most significant changes have been occurring in the energy sector.
“According to Operation Vulindlela data, 22,500 MW of private sector projects are currently in the pipeline, with an estimated investment of R390 billion.”
That is about half of the installed capacity of all of our coal-driven power stations combined! Eskom produces a maximum of around 29,000 MW peak power daily, with consumption running between 22,000 MW and 27,000 MW to keep load-shedding at bay. Load-shedding is no longer a private power problem – but the ever-rising Eskom tariffs are still driving consumers to invest in solar power.
It seems certain that 2024 will see even higher fixed investment into the country. That augurs well for 2025 and beyond by lifting GDP, increasing employment, and improving the quality of outcomes for money well spent rather than wasted.
The markets tell the story…
This past year has certainly been good to investors who have had a meaningful allocation to the share markets – whether locally or globally.
The graph on the left presents a pretty picture of the growth over one year of the S&P 500 index – from 4,600 all the way to above 6,000 in just 12 months! That small, circled bump was when Donald Trump’s clear victory was evident in the USA elections – initial euphoria and then a short and sharp sell-off back to reality and a continued upward trend.
Of course, there remains plenty of uncertainty in the global markets with the change in US Presidents set to take place in January 2025. We need to be mindful of the chaos in global markets in 2018 following Trump’s initial term, where shares tumbled in the tariff turmoil with China, Mexico, Canada, etc. Trump seems to be playing with the same drum this time around – even though President Biden did NOT relax a single one of the Trump tariffs against China.
The South African share market – evidenced on the right by the All-Share Index – also enjoyed a good growth spurt but has lost
its way a little in the last quarter. This index improved from around 76,000 to a peak of about 88,000 before settling back to 86,000 at the end of November. The short plunging red line on the chart shows the immediate aftermath of our local National Elections – when the ANC lost its clear majority, but the coalition talks had yet to settle.
The upward-striving green line traces the very positive sentiment which followed the formation of the GNU, primarily between the two biggest parties, the ANC and the DA. Of course, that “marriage” will have more than its fair share of turmoil due to sharp ideological differences over many issues – but so far, so good. Recent polls show that the support of both the ANC and the DA has risen following the elections, while the MK and EFF support has declined.
We look forward to meeting the challenges that 2025 may well present to us as investors and advisors. We plan, as usual, to have a steady hand on the tiller while we ride the waves with you to achieve the investment goals you strive for.
We wish you a wonderful Christmas and a joyful festive season.
Our offices will close on Friday, 20th December, and reopen to the public on Monday, 6th January 2025.
Warm regards,
John & The Finlaw Team
