Sasfin Wealth Q3 Newsletter

The so-called “State Capture project” has shaken South African civil society to its core. The Zondo Commission of Inquiry has laid bare the extent of influence that corrupt individuals and organisations have had on the State. The degree of malfeasance and negligence on both sides (public and private sector) have left many investors locally, and abroad, bewildered.

Respected journalist, Mariaane Merten, writing in the popular Daily Maverick, quantified the cost of State Capture over the past several years at an estimated R1.5tn. This staggering figure, just short of the R1.8tn national budget for 2019, or a third of the country’s gross domestic product, encompasses considerable debt accumulated at state-owned entities such as Eskom, Transnet, Prasa, Denel and SAA to name a few. Added to this, the billions that have been wiped off the local stock exchange as a result of politically-oriented market shocks; such as December 2015’s Nenegate, where approximately R378bn in value destruction took place overnight on the Johannesburg Stock Exchange (JSE).

Against this backdrop, it is incumbent, more than ever, for companies to act ethically, and to conduct their business affairs with integrity and transparency, in an effort to restore both the country’s moral compass, as well as the private sector’s own standing on the global stage.

The theme for this edition of Global Wealth is centred on how Portfolio and Fund Managers, and Wealth Advisors safeguard their clients’ long-term wealth by ensuring they identify and avoid those companies and institutions that are found guilty of fraudulent or corrupt practises.

In the context of a low growth environment where volatile equity markets have become the norm, it is not only critical for Investment Managers to interrogate the governance and management of investee companies in order to protect their client portfolios, it is also incumbent for Investment Managers to continually explore global opportunities to ensure capital growth to support the capital preservation. In lieu of this, Jonathan Sieff explores various economic trends that will dominate the next several years – from Smart Healthcare, to Robotics and Artificial Intelligence (AI), and from Cloud Computing to Clean and Renewable Energy – which could help unlock these investment opportunities.

At the same time, with the local savings and retirement landscape not looking particularly comforting, Johan Gouws and Bongiwe Momoza of Sasfin Wealth’s Institutional Consulting division, take the opportunity to showcase the Sasfin Wealth Umbrella Retirement Fund (SWURF). In their piece, they discuss SWURF’s offering which includes a Pension Fund, Provident Fund, Preservation Fund and a Retirement Annuity Fund option for capital accumulation purposes. The offering also allows for the integration of a member’s investment, and risk and healthcare benefits which allows for the necessary flexibility to speak to the requirements of each participating employer and each Fund member.

We are also fortunate to have a contribution in this edition from Sasfin Holdings Chairman, Roy Andersen. In addition to holding numerous directorships, Roy is a founding member of the King Committee, a former Executive President of the JSE and CEO of Liberty Holdings Limited. In his piece, Roy raises several red flags that lay and professional investors alike need to consider when evaluating the skills and balance of power of Boards. Roy suggests that by testing the structure of the Board and how it operates, Portfolio and Fund Managers could identify these red flags and hopefully limit the risk of investing in the wrong companies on behalf of their clients.

2019 has been an unusual year for erstwhile Sasfin Group CEO Roland Sassoon. For nearly five decades, Roland was considered part of the very fabric at Sasfin, and taking a year’s mandatory gardening leave has no doubt been challenging for him. Our extensive interview with Roland covers his family’s immigration to South Africa in the mid-1940s, as well as Sasfin’s early transition from a textile importing business known as Sasstex. Roland also shares his insights on the challenges facing the local economy, together with some lessons learnt along his personal entrepreneurial journey. In our regular News in Brief section, we proudly announce the establishment of the Sasfin Digital Advisory Council, chaired by Arthur Goldstuck. We wish the Council well in its endeavours.

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