Welcome aboard – Stacey Lancaster.
We are pleased to welcome Stacey, the daughter of Sue who worked for Finlaw several years ago, to the team. Stacey has just completed her B.Com Law degree which she achieved part-time with several subject distinctions along the way. Stacey teams up with Candice Read to form the backbone of our support staff.
A positive quarter-end for November 2010.
After 6 months of sideways vacillation which I reported on in the last review – this quarter has seen a return to positive growth in the markets both locally and internationally. Some wind was removed from our sails in the last 15 days or so of November – but as you will see from the graph below – the markets ticked up again into December outpacing the November peaks.
With very few exceptions [largely due to timing issues] our client investments across the board have fully recovered in their respective domestic currencies from the global meltdown that occurred just 2 short years ago. A pleasing result given the extent of the crash that occurred at the end of 2008!
Currencies and Exchange Control.
Our local currency remains stubbornly strong – despite the efforts of the Reserve Bank who have lowered interest rates to levels last seen decades ago and who have recently announced several exchange control relaxations for Residents and Local Institutions. Money continues to flow into emerging markets from abroad with increased appetite for high risk / high returns. According to most fund managers that we deal with, local equities are looking expensive in comparison to offshore equities – and this reflects in the fact that most of them have maximised their offshore investments in recent months.
You have probably read several economists suggesting that the next decade, 2011 to 2020 should compare favourably with 1991 to 2000 when offshore investments did far better than local ones – both because of greater growth in those markets and because of a weakening local currency. For us – it’s more about diversifying risk than chasing high returns when taking your money offshore. However, when you get both it is a welcome bonus. In the chart above the Rand weakens when the lines rise up the scale and strengthens when they slide down again. Notice how quickly our currency weakens [almost vertical lines going up] and how it strengthens again far more gradually.
For those interested – you can now take R4 million offshore for foreign investment per annum from January 2011, regardless of how much you have taken out before. The present exchange rates present a good opportunity to diversify your risk so contact us in the New Year for a review of your strategy and the wisdom of incorporating global investments.
Happy Christmas and a Prosperous New Year.
We wish you safe journeys, happy holidays, a blessed Christmas and as always a really prosperous 2011 from all of us on the Finlaw Team.
Please note that we will close at 12:00 on 23 December 2010 and reopen on Monday 3 January 2011.
Best wishes from … Redvers Lee, Simon Francis, Rowan Allpass, Candice Read, Stacey Lancaster and of course … from me
John Wallace
22 December 2010.
