Offshore and Local Investing

NHI to be implemented over about 14 years

2011-10-26T23:41:00.000-07:00

Pravin Gordhan said that although the first phase would be implemented in Q2 of next year in the form of 10 pilot projects which would be launched in selected districts.

The first five years would focus on enabling the public health system to provide quality healthcare.

He also stressed that the costs of implementing such a huge venture would not overburden the stae as it would be planned carefully and the costs would be incurred over a period of time.

Many had feared that the NHI system would be rushed into operation next year with unknown consequences for South Africa's overburdened 5 million taxpayers and with potentially disastrous results for the private healthcare sector.

South Africa rates very well in some categories and poorly in others - WEF

2011-09-25T12:27:00.000-07:00

SA's highest ratings in the Global Competitiveness Report of the World Economic Forum (142 countries tested):

Best regulated Stock Market in the world
SA Banks are the 2nd soundest in the world
SA corporate boards were 2nd in terms of efficacy
Top 5 in Access to financial services and equity finance
Competitions Commission is rated 7th

SA's most notable poorest ratings:

141st in terms of likelihood to contract TB
130th for Life Expectancy (51.6yrs)
140th in HIV infections (17.8% of our population)

As we know, ours is a country of huge diversity of culture, of standard of living and of strengths and weaknesses. We need to reduce the income gap between the rich and the poor, or more accurately, we need to lift the living standards of the poor.

To buy or to sell?

2011-08-15T23:49:00.000-07:00

Those who do not like uncertainty should quite simply stay away from equity markets right now, while those of us who like to buy at a good price shouldn't hesitate to get in, after doing their research.

Importantly, you need to know what you want to buy first and then time the decision for when the price is attractive.

So, if you have high conviction about it, take some of your cash and get in and buy a few undervalued businesses (or a fund) now at a price which is certainly not as high as it was and with fundementals looking pretty attractive - in many industries especially outside of South Africa - and then keep monitoring for further opportunities

One traditional way of reducing Estate Duty under threat

2011-08-01T01:56:00.000-07:00

Most well-informed families simply arrange amongst themselves to distribute the more valuable and transportable assets of the matriarch or patriarch informally to family heirs before the executor arrives to tally up the score. This helps to reduce both the amount which will be payable to the executor (executor's fees are levied at a maximum of 3.5% + VAT, but are negotiable) as well as the amount payable to SARS in the form of estate duty. They achive this by removing the assets from the family home very smartly if their parents did not distribute them during their lifetimes (a very good idea on many counts).

Beware, as SARS has become wise to this strategy and they are nowadays careful to check the list of assets covered by an insurance policy in order to check whether they have been short-changed or not. An idea mooted by a friend is to ensure that such assets are not specified...? This may not be a good idea for obvious, insurance claim-related reasons.

Do not draw more income than your Living Annuity can sustain

2011-07-20T07:24:00.000-07:00

When we reach retirement, most of us have to choose between maintaining our lavish lifestyles and thereby possibly facing financial ruin before too long or alternatively lowering our lifestyles in order to preserve our capital for longer. The problem is, we don't know how long we are going to live and with modern medical cures and procedures on offer, we are probably going to live longer than we had expected.

Once we are no longer earning an active income, the more income we draw and spend in the early stages of retirement, the less we will have available to sustain the value of our nest egg later on and this could meand that it could run out! In inflationary environments, it becomes paramount to continue to grow our capital and therefore also our annuity income throughout retirement, so as to retain one’s purchasing power.

In a living annuity, legislation allows annuitants to draw between 2.5% and 17.5% of their capital per annum. The latter is extremely high and is not sustainable over any period of time unless one's investment returns are phenomenal!
The point is this: Capital preservation is dependent upon two variables: the total return (both capital gain as well as income earned) achieved and the rate at which income is drawn from the annuity. In essence, the total returns achieved during retirement need to exceed the rate of growth of required income by at least the inflation rate in order for the income received (annuity) to keep pace with the ever-increasing cost of living. The larger the outperformance of the portfolio vs the required income growth, the more one's portfolio will grow in real terms, meaning that later on in retirement one will be able to increase one's income level to even higher than the inflation rate. This may be required due to the increased likelihood of having to undergo expensive medical procedures and treatments (the cost of these tends to increase much faster than inflation).

Now, in order to achieve the desired total return for a specific retiree's circumstances, a detailed analysis is required by a qualified financial planner. Ideally, the financial planner should not place the retiree's capital in investments which offer extreme volatility unless the capital is large enough to withstand such risk of loss. Most of us do not have nest eggs which far exceed that amount required to sustain our lifestyles.

For that reason, in most cases, annuity funding portfolios are invested in more conservative assets than would have been the case earlier in the retiree's life. This means that they will not grow as fast as they might have had they been more aggressively invested. This then has the result that it is almost impossible to make up for lost ground once in retirement. In other words, if you have not saved up enough of a nest egg before going on retirement, you are not going to be able to catch up without taking undue risks. Risks which have potentially dire consequences.

The bottom line is this:

Save early and as much as you can
Spend less than your retirement portfolio generates especially in the first several years of retirement
Increase your income annually in line with inflation if able to

In summary:

Investors need to examine their personal financial circumstances very carefully before deciding to eat into their retirement capital to supplement their income. Rather bite the bullet in the beginning and reap the benefits of that discipline later on. This is often very difficult, however, it is preferable to finding out that one’s capital has been irreparably eroded causing one to seek financial assistance from one's children or having to try to look for the odd job to earn a few extra pennies.

Local interest rates at a cross roads

2011-06-27T22:56:00.000-07:00

The Reserve Bank does not wish to impede the already weak recovery experienced by the local economy over the last couple of years. Gill Marcus wants to ideally wait for a signal that employment is increasing (i.e. that the unemployment rate is decreasing) and that tax collection are improving, before having to increase the interest rate. On the other side of the coin, the cost-push pressures such as rising food and fuel prices are threatening to force CPI above the 3-6% band preferred by the SARB. The longer term risks associated with high inflation are to be avoided, however, if need be, the SARB may tolerate inflation of say 7% for a short while if no signs of a sustainable recovery are evident. The key word here is "balance". Balance between poor economic growth and uncontrolled price increases. The consequences of both evils being hardship and therefore social unrest amongst the poor & SA has far too many people who are vulnerable.

Local Govt Elections in SA

2011-05-21T23:09:00.000-07:00

The results of the 2011 local govt elections show a maturing of the democracy in South Africa. Apart from the continued existence of scores of tiny opportunistic parties in the large metropolitan areas, the peripheral parties which enjoyed strong support in previous elections, seem to be disappearing from the landscape.

These include the IFP (with 3.94% of the total vote), which is now a much weakened regional party focusing on KZN, the PAC (0.43%), the UDM (0.68%), COPE (2.33% of the total vote) and the ACDP (0.6% of the total vote).

The newly launched National Freedom Party (with 2.58% of the total vote),did however make inroads especially into traditionally IFP territory.

Two parties are clearly taking over the political landscape, namely the ANC and the DA.

The ANC's majority was reduced from just over 66% to 63.65%, while the DA's support increased from around 18% to 21.97%.

Should this trend continue, South Africa will become a two party state which, in developed nations, generally means a strong opposition to the ruling party. Could this one day lead to a possible regime change? Last week's elections seem to indicate that this is possible.

The electorate have begun to vote outside of their traditional comfort zones, i.e. along the old racial lines. The DA has also begun to garner councillors, and therefore support, from the broader spectrum of South Africans and are starting to show that they will play a significant role in the way South Africa is governed from now on. This development should provide much confidence for current as well as potential investors.

It's time to invest while the Rand is at this level

2011-02-16T22:55:00.000-08:00

The Rand has strengthened somewhat (yesterday) and this has presented those of us who have been waiting for an opportunity to take profits and to invest them in something more attractive from a valuation point of view, to move some capital out of the Rand and into cheaper first world multi-nationals. Get that money out while global equities are in rally mode and the Rand is therefore fairly strong. Invest in a good mix of assets or asset allocation funds which are nimble and actively managed if you are cautious. If you want to maximise the opportunity of the current rally in the developed world, get into attractive, relatively high yielding franchise stocks.

Will the rally hold?

2011-02-15T23:21:00.000-08:00

Seeing we're benefitting from the typical third year rally (3rd year of a US administration's term, that is), can we expect this renewed climb to continue for some time to come or will it peter out later this year? The risk of another US & then global equity market bubble, fuelled by QE2 & possibly even QE3, 4, 5... seems high, but will the US political scene end this run before that can happen? Will inflation fears put a (sensible) dampener on things before they get out of hand? The next six months look positive, even if its for the wrong reasons, after that, higher returns will bring on higher risks, stay in and take the risk or change your asset allocation and be very nimble.

Where will one achieve the best returns next year?

2010-12-30T23:30:00.000-08:00

Is this the correct question to ask? Should we be looking at the short term or should we be focussing on the longer term, say 5 years? Fact is if one does not achieve a decent return over the short term, we will have to catch up over the next couple of years. In order to do this you will have to take on more risk than one would have liked.

Essentially, we need to know what return we desire over the next few years (to retirement or over a fixed period such as 5 years). Then we need to decide from our own research what we expect is the most likely global and local asset pricing scenario over the short term, keep updating this scenario using circumstances as they unfold, and then allocate towards the mix of assets which we feel will offer the most appropriate risk adjusted return based on one's current financial situation and therefore appetite for risk and need for return.

Hopefully in this way we will not be likely to have to catch up for lost time because we will have avoided those large drawdowns. Sounds easy, doesn't it.

So, where to for 2011? Emerging markets or developed markets? East or West? A crippled but cheap Europe or an attractive but expensive China? Will the US remain the driving force behind the world economy? Will gold climb much further due to a weakening US$ and concern over sovereign debt or is it about to peak? We need to get at least half of these answers right in order to be able to achieve a large degree of success.

Is it possible to predict the answers to these questions scientifically and accurately? Probably not. We do have to build models which give us a fairly accurate idea of what we think will happen based on existing data and our knowledge of economics and human behaviour, but we cannot be sure how accurate our predictions will prove.

We then need to build a portfolio of assets which we feel will be able to withstand all types of markets without experiencing those large drawdowns. This means that we cannot rely on one or two big bets getting us the returns we desire. (Predictions per se do not form the basis for good returns). We also need to be able to value assets so that we ensure that we purchase at cheap levels and sell at higher levels...quite a challenge!

Can we do all this on our own? Probably not, this is where one needs a professional financial advisor who understands our personal circumstances and who then matches our objectives to portfolios managed by experienced and outperformaing fund managers. Our chance of success will have been increased.

Ireland's reknowned low business tax part of the problem

2010-11-24T02:13:00.000-08:00

As Ireland looks to consider the tough terms of an international bail-out package, it's low business tax which has attracted around 1,000 multinational corporations, emerges as one of the chief reasons for its dire financial situation. It's all good and well to attract business in order to stimulate jobs etc, but if the state doesn't change the terms on a gradual basis in order to earn enough revenue from their presence, then it becomes a long term loss leader - with awful consequences.

Have South African financial assets had their finest hour (decade)?

2010-11-12T11:42:00.000-08:00

In highly regarded investment circles the belief is that the 8 year bull run which we've enjoyed in South Africa is about to end. The theory is that we have benefitted from what is referred to as the democracy dividend and that, now that the euphoria has waned and reality is back, things will go back to normal. Also, local p/e ratios are no longer as attractive as those offered overseas and nor are our dividends yields. But is it that simple? Are the Western banking systems strong enough to survive? Will the sovereign debts crisis sort itself out quicker than expected?
With a huge interest rate differential in our favour and with the yields offered on our capital markets so favourable, and with no immediate change being evident, surely this influx of foreign money will cause a second round of pro-South African fervour. Or will this be spoilt by mis-management of the economy, by rising unemployment, by nationalisation and low productivity, by the proposed NHI which is quite possibly going to cause our tax rates to sky-rocket, or even by the NCA which surely needs to be reviewed? Which will it be? Which way will it go? Are we simply to experience a period of deceleration to be followed by another even greater surge of growth down the line if legislators keep policies sensible? The bull run may be ending, but it may not be the last bull run that we'll see.

Voluntary Disclosure Programme - Amnesty No.2

2010-11-08T11:46:00.000-08:00

The new tax and exchange control Voluntary Disclosure Programme for taxpayers who wish to disclose previously undisclosed unpaid taxes may do so from today, Monday the 8th of November. This tax and exchange control amnesty is different from the previous one in 2003 where only individuals were able to apply. Now trusts and companies may also come clean. However, another difference is that only penalties and interest will be waived in terms of the amnesty this time. All due outstanding taxes are to be paid in full. This time SARS and the SARB are involved separately and directly whereas last time a special Amnesty Unit was formed to process applications on their behalf. Anonymous enquiries may be made to either SARS or SARB in order to determine whether one qualifies in terms of the Tax or Exchange Control VDP or not (before making formal application).
The VDP lasts until October 2011. For a confidential discussion, you may e-mail vdp@groominvestmentconsulting.co.za

Emerging Markets may be near a short term top - Stay put if in for the long term

2010-11-05T03:03:00.000-07:00

Emerging markets have been steaming ahead since the bottom last February. Have they shot their bolt? I think they may have if you have a shorter term view, inflation is approaching and quality stocks are generally trading at levels which are far less attractive than sim,ilar high quality stocks based in developed markets. This doesn't mean you should switch out of your EM funds if they are a managable portion of your portfolio. Just don't go in right now. Also, if you have a global equity holding, just trust your (quality) global equity manager select stocks which can benefit from revenues earned elsewhere for a while.

Exchange Controls for individuals are now virtually a thing of the past

2010-11-05T01:34:00.000-07:00

South African residents are now able to send capital worth up to R4million per year for foreign investment purposes. This means that most of us will no longer need to worry about exchange control regulations. Even those families with joint assets exceeding R8million will be able to send everything out pretty swiftly after having left the country. And this without paying the excess levy of 10%.

Market Timing could cost you dearly

2009-07-24T10:57:00.000-07:00

As surely as night follows day, stock market upswings are followed by downswings. And during times of uncertainty on the JSE it is only human to be concerned about the impact thereof on the value of your investment.

Many analysts agree that investors would usually be better off if they resist the temptation to change their long-term investments simply because of short-term movements in the market. If your personal circumstances and investment objectives remain unchanged and you can maintain a medium- to long-term view, it is probably better not to do anything in times of uncertainty.

Few investors will dispute the fact that equity investments significantly outperform the return on fixed-interest investments in the long term. Investors also know that equity markets are subject to, sometimes sharp, fluctuations over the short term. In times of uncertainty it may be a temptation to consider selling existing investments and reinvesting when prices are lower. This strategy is known as “market timing”.

Market timing is an investment strategy that relies on your being able to predict the future and to know what it holds so that you can protect your capital by not getting caught in any downswings. You must also know when the market is going to turn around, so that you can exploit any new upswings.

A major issue regarding investment in unit trusts is the question of whether or not market timing works. Buying low and selling high is easier said than done. A fund applying market timing - which buys or sells depending on the direction of the market - can prevent you from losing money in down-markets, but can also result in your missing out on up-markets. A market timer must not make only one correct decision, but two: when to withdraw from and when to re-enter the market.

An analysis by Plexus Asset Management of the daily movements of the FTSE/JSE Overall Index for the period 1995 to 2006 shows that missing out on market performance for only a few days could have a significant effect on performance (dividend income was not included in the study).

The accompanying table shows that by missing the 10 worst days in terms of daily movements (fewer than one day a year), the annualised capital growth is more than 50% higher. By missing the 40 worst days (fewer than four a year), the capital growth increases nearly two and a half times.

Although market timing sounds good in theory, it seldom works in practice. Most of these large daily declines occur as a result of some political or financial shock, which usually cannot be foreseen.

The table also shows that by missing out on only the 10 best days in terms of daily movements, the capital growth declines by approximately one third. By missing out on the 40 best days there is virtually no capital growth over the 12-year period. Most of the large upswings occur when markets start rallying after the political or financial shocks.

It has been found that in practice such shocks result in an investor selling his existing investment once markets have declined sharply and that he therefore does not miss the major downswings. On the other hand, the investor only invests once prices have risen sharply, and he therefore also misses out on the major upswings.

Most academics scorn market timing. Research conducted by Brinson, Singer and Beebower (1991) in the USA found that market timing contributed only 1,8% to the variance in equity returns compared with the 91,5% contributed by asset allocation and the 4,6% by share selection. Another American study by Sharpe (1992) also concluded that active management contributed only 10% to the variance in equity returns, whereas the rest could be ascribed to style factors.

Another approach is to disregard the risks of market timing and to ask how great the benefits would have been if an investor's timing had been right. Plexus Asset Management's researchers therefore also looked at the hypothetical situation of three people who decided 12 years ago to invest a fixed amount every year.

Person A was extremely lucky and annually invested at a market low, as determined by the JSE Overall Index. However, person B was unlucky and annually invested at a market high. Person C invested on a 'random' date every year, in this case 31 January.

The compound capital growth earned by person A over the period was 12,1% per annum, while in the case of person B it amounted to 9,0% per annum. Person C achieved capital growth of 10,8% per annum.

It is not surprising that an investment made at a market low achieved a better return than an investment made at a market high, but the difference in return between the high and the low was less than expected.

Although there are times when you should be more heavily invested, the risk of underperformance increases considerably if you are continually withdrawing from and returning to the market.

Investors who buy and hold have the best chance of being successful. Those who apply market timing run the risk of holding cash during a bull market. Remember, time, and not timing, is the key to successful investment.

DIFFERENCE IN CAPITAL GROWTH IF YOU MISS A FEW DAYS

Strategy Capital growth (p.a.)

Always fully invested 13.8%

Misses 10 worst days 21.0%
Misses 20 worst days 25.3%
Misses 30 worst days 29.1%
Misses 40 worst days 32.5%

Misses out on 10 best days 9.0%
Misses out on 20 best days 5.6%
Misses out on 30 best days 2.9%
Misses out on 40 best days 0.5%

Source: Plexus Asset Management

Scams and Ponzi Schemes

2009-06-30T08:43:00.000-07:00

These guidelines could help protect you from becoming the victim of an illegal financial scheme:

Ask yourself (and the person trying to solicit your financial backing) whether the business actually involves a service or product being supplied to a buyer
If so, what is the value add they offer?
If not, leave it alone
Find out if the business is regulated in terms of local legislation. Approach the FSB if they purport to be a financial services business
Who are the principals of the business? Ask for their curriculum vitae & study them with plenty of scepticism. Google their names and find out if there is any bad publicity about their activities in South Africa or abroad. Ask your financial advisor, attorney & financial professionals to ascertain whether they have a bad reputation in their industry
Ask to see the registration papers & financial statements of the business
Are the promised returns on your capital extremely high? If they are, leave it alone
Are their returns too smooth even during bad market downturns? If they are, do further research
If you would like me to assist you in researching them, let me know at offshore@yebo.co.za

New South African Retirement Savings Tax

2008-10-28T04:57:00.000-07:00

Every year the National Treasury throws a few curveballs into the Medium Term Budget Policy Statement (MTBPS), and this year is no exception, with some changes announced to the taxation of retirement savings vehicles and microbusinesses.

From March 1 2009, pre-retirement withdrawals from designated retirement savings vehicles will be taxed, at rates shown below.

Proposed rate structure of pre-retirement withdrawals from retirement savings

R0 - R22500 - to be taxed at 0%
R22501 - R600000 - to be taxed at 18% of the amount above R22500
R600001 - R900000 - to be taxed at R103950 + 27% of the amount above R600000
R900001 and above - to be taxed at R184950 + 36% of the amount above R900000

Isle of Man Enhanced Depositor Protection Plan Does Not Cover Offshore Bondholders

2008-10-28T04:48:00.000-07:00

The Isle of Man Treasury has confirmed that savers in offshore bond wrappers will not get any individual cover under the enhanced depositor protection scheme.

On the 23rd of October the Manx government raised protection levels from £15,000 to £20,000 for non-individual depositors previously covered under the 1991 scheme, including charities and businesses.

However, according to Isle of Man Finance director John Spellman, these changes do not provide cover for individual clients with investments in offshore wrappers. He says: “My reading of the legislation is that offshore bond savers are only covered under a corporate cover of £20,000. It is up to the scheme adviser but my understanding is that it’s one cover per insurance company.”

Bank Depositors' Guarantees

2008-10-17T22:49:00.000-07:00

If you feel uneasy about the financial position of your offshore bank, read on.

It has come to my attention that the Financial Supervision Commission of the Isle of Man (which forms a part of the British Isles) has just this week (Wednesday the 15th ) launched a compensation scheme aimed at protecting both local (Manx) and foreign (everyone else) depositors who have balances in Manx domiciled bank accounts.

The scheme has a maximum limit of £50,000 per depositor. That means that you will be protected up to that amount, no matter how many accounts you may have with that bank.

This scheme does not apply to Jersey and Guernsey domiciled bank accounts as the Isle of Man decided to take this step and not the British government.

For further information, you can go to the Isle of Man’s FSC’s website, www.gov.im/fsc

Sharp Rally in Global Equities

2008-10-14T21:54:00.000-07:00

Equities rallied sharply on Monday and to a lesser extent also Tuesday in response to the previuos week's utter collapse. Japan enjoyed a public holiday on Monday which showed on Tuesday as the Nikkei225 soared over 14%.

We'll have to see how long this lasts. By all indications, it may already have petered out.

European Central Bank Reduces Lending Rate

2008-10-09T01:32:00.000-07:00

The Governing Council of the ECB, by means of teleconferencing, has taken the following monetary policy decisions:

The minimum bid rate on the main refinancing operations of the Eurosystem will be reduced by 50 basis points to 3.75 %, with effect from the main refinancing operation to be settled on 15 October 2008.

The interest rate on the marginal lending facility will be reduced by 50 basis points to 4.75 %, with immediate effect.

The interest rate on the deposit facility will be reduced by 50 basis points to 2.75 %, with immediate effect.

In the euro area, upside inflationary risks have recently decreased further. It remains imperative to avoid broad-based second-round effects in price and wage-setting. Keeping inflation expectations firmly anchored in line with our objective and securing price stability in the medium term will support sustainable growth and employment and contribute to financial stability.

Bank of England Reduces Bank Rate

2008-10-09T01:03:00.000-07:00

The Bank of England's Monetary Policy Committee yesterday voted at a special meeting to reduce the official Bank Rate paid on commercial bank reserves by 0.5% to 4.5%.

The Monetary Policy Committee held a special meeting on Wednesday 8 October, some hours in advance of its normal schedule. After that meeting, the Bank of England, in conjunction with the Bank of Canada, the European Central Bank, the US Federal Reserve, Sveriges Riksbank, the Swiss National Bank and the Bank of Japan, released a joint statement which can be read at www.bankofengland.co.uk/publications/news/2008/067.htm

US Fed Announces Reduction in Federal Funds Rate

2008-10-09T00:59:00.000-07:00

The Federal Open Market Committee yesterday decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.

Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.

The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

The US$ Strengthens as the global banking system needs funding

2008-10-07T13:21:00.000-07:00

The US$ has surged again in recent days against the Pound as funding is attracted to help the global banking system out of its quagmire. This strength has caught many currency traders off guard. They felt that the recent surge was a temporary one that was over now. They may not be far wrong as this may still prove to be a short term spike. However, I feel that it is a cyclical turning point too and that the US$ will most likely enjoy a period of strength for some several months.

The US Senate Approves the 2nd Bailout Draft

2008-10-03T01:54:00.000-07:00

The US Senate approved the 2nd draft of the $700bn bailout plan of the financial industry late on Wednesday. The vote was 74 for theplan and 25 against it.

The bill is aimed at reinvigorating worldwide credit markets and interbank lending which had stalled.

Fears had emerged that failure to pass such a rescue plan could plunge the US and possibly also the global financial system into total turmoil.

This latest draft will now go to the House of Representatives, where a vote will probably be made on Friday.

US President George W Bush praised Senate passage of the package and urged the House to quickly do the same.

Treasury Secretary Henry Paulson, whose original three-page proposal grew to hundreds of pages when Congress got involved, praised the Senate vote and urged the House to act swiftly to ratify it.

Should the House uphold the bill, it would go to the White House for signature into law by President Bush within a couple of days.

The US (& world's) Financial System at Risk

2008-09-29T13:35:00.000-07:00

The House of Representatives this afternoon(SA time)rejected the Bush administration's proposed $700 billion rescue package for the financial sector, triggering a massive sell off in stocks and a rush into safe-haven government bonds.

The voting was 225 against vs 208 for.

The result was a sliding Dow Jones and all other US indices which in turn affected all other equity markets which were open for trade.

The Fed seems to not have the ability in its balance sheet to help its banking system on its own, but congress was worried that this emergency rescue package would hold long term consequences for the US economy if passed in its current form.

Will we see a reworked plan in the next few days? Until a solution is found, markets will continue to reflect the high level of uncertainty which it dislikes so strongly.

Trevor Manuel Willing to serve under new President

2008-09-25T12:34:00.000-07:00

Trevor Manuel said on Tuesday that he was willing to serve in a Kaglema Mothlante cabinet if asked to do so. This seemed to immediately have a somewhat calming effect on markets.

The rather one-sided interim Presidential election was held on Thursday. The ANC Deputy President, Kaglema Mothlante won 269 of the 360 possible votes against the only other candidate, the DA's chairman, Joe Seremane, who received 50 votes.

He seems to be very popular amongst his fellow MP's, but it remains to be seen what sort of direction he will give to the cabinet which is yet to be selected. It will also be interesting to see which ministers who served in the Mbeki cabinet will be asked to stay on as this will surely have a big effect on the efficiency with which the country is governed up until the 2009 Presidential election.

Trevor Manuel and Nine other Cabinet Ministers Resign

2008-09-23T06:00:00.001-07:00

Today, Tuesday the 23rd of September, the following statement on the resignation of members of Cabinet and Deputy Ministers was made by the office of the president:

President Thabo Mbeki has, to date, received letters of resignation from the following members of Cabinet which, regretfully, he has had to accept:
1. Deputy President
2. Minister of Defence
3. Minister of Finance
4. Minister in the Presidency, Dr. Essop Pahad
5. Minister of Intelligence
6. Minister of Correctional Services
7. Minister of Public Enterprises
8. Minister of Science and Technology
9. Minister of Public Works
10. Minister of Provincial and Local Government
11. Minister of Public Service and Administration

The following Deputy Ministers have also tendered their resignations:
1. Deputy Minister of Foreign Affairs, Mr. Aziz Pahad
2. Deputy Minister of Finance and
3. Deputy Minister of Correctional Services

The resignations will be effective from the day that the President's resignation takes effect (Thursday the 25th of September). All the Ministers have expressed their availability to assist the incoming administration in the hand-over process and any other assistance that might be sought from them. President Mbeki thanked the Deputy President, the Ministers and the Deputy Ministers for their dedicated service to the nation and wished them well in their future endeavours.

Thabo Mbeki Resigns & two Cabinet Ministers follow suit

2008-09-22T07:38:00.000-07:00

The South African president announced his resignation on Sunday night. This happened after an ANC NEC meeting last week voted overwhelmingly to ask him to vacate his office as President of South Africa.

His staunchest ally and long time student colleague & friend, current minister in the Presidency, Essop Pahad, has announced that he will step down the day Mbeki leaves office.

Interestingly, the only non-ANC cabinet minister, Mosibudi Mangena has also announced his intention to resign.

The Deputy President, Phumsile Mlambo Ngcuka, has decided to stay on after being asked by President Mbeki to do so. A number of other Cabinet Ministers are also believed to have been convinced to stay on after an appeal to them was made by President Mbeki.

These are interesting times in South African politics. The next encumbent, whoever that may be, will only be an interim President, and will be faced with an economic crisis as well as a political crisis. Cometh the time, cometh the man/woman.
Who will be the next President? Motlanthe/ Mbete, another ANC MP?

Short Selling Ban did the job for now

2008-09-22T06:53:00.000-07:00

The UK's SFA and the US's SEC announced rules to restrict the short selling of stocks last Wednesday, global stockmarkets rallied tremendously on Thursday and Friday. It led to the biggest rally in the last 38 years, this amid one of the worst week's in financial memory.

The shorting of stocks is when pessimists to buy put options giving them the right to sell those stocks at a perdetermined price at some time in the future. This tends to add impetus to stock market negativity.

The move to restrict shorting was a brave one. It showed how concerned financial regulators were that markets could continue to go down because of the prevailing negative sentiment.

Lets hope this has assisted bulls in their quest to buy stocks at bargain basement prices without further delay. This will then gradually change sentiment as traders see more and more chance of making gains in the near term.

AIG, the world's biggest insurer rescued by US govt

2008-09-18T03:51:00.000-07:00

AIG, which sponsors Manchester United, was on the brink of collapse when govt officials agreed to provide an emergency loan this week. The rescue package provided by the US govt was £47.2 billion.

The US Federal Reserve said a "disorderly failure" of AIG could undermine already fragile financial markets. The US government will receive an 79.9% equity stake in the company in return.

The group - massively exposed to the plunging US housing market - was granted an £11.2 billion initial lifeline to shore up its finances on Monday night.
But AIG was then downgraded by three major ratings agencies, making it more expensive for the firm to raise funds.

AIG, which made a net loss of £7.4 billion in the first half of this year, saw its shares tumble more than 30 per cent in early Wall Street trading.

The company employs more than 116,000 employees, and many full- and part-time agents, worldwide.

It operates in 130 countries and jurisdictions, including Brazil, China, India and Taiwan, as well as the United States and United Kingdom

AIG the US's largest insurer is rescued by the Fed

2008-09-16T21:42:00.000-07:00

The Federal Reserve Board announced last night that it is to lend around US$85 billion to rescue the crumbling insurer American International Group (AIG).

The Fed authorized the Federal Reserve Bank of New York to lend AIG, a Fortune the funds. In return, the federal government will receive a 79.9% stake in the company.

The company was about to file for bankruptcy. With around US$1.1 trillion in assets and 74 million clients in 130 countries, this would have been catastrophic.

An eventual liquidation of the company is most likely, but with the government loan the company won't have to go through a tumultuous fire sale.

Nedbank has a strategic alliance with AIG, using it as the underwriter of its clients travel insurance.

Lehman Brothers Folds and Merrill Lynch taken over

2008-09-15T23:01:00.000-07:00

The credit crunch takes a double toll.

Lehman Brothers, the New York headquartered global financial services group founded in 1850, has collapsed. The firm filed a petition under Chapter 11 of the US Bankrupcy Code to protect its assets from creditors, yesterday. See www.lehman.com for more information.

The US icon owes in the region of US$157bn to its 10 largest creditors alone.

The second victim announced yesterday was the giant Merrill Lynch, the Delaware firm founded by Charles E Merrill and Edmund C Lynch in 1915.

Merrill Lynch has been forced to right down more than US$40bn over the last year due to the credit crunch caused by the collapse of the sub-prime homeloan market in the US. Bank of America, arguably America's oldest banking group with a related history going right back to 1784, yesterday announced its acquisition of Merrill Lynch for around US$50bn. See www.ml.com and www.bankofamerica.com for more information.

This is how the major indices ended on Monday the 15th after this news:

DJIA -4.4%, closing at 10917.51
NASDAQ Comp -3.6%, closing at 2179.91
S&P500 -4.7%, closing at 1192.70
Russell 3000 - 4.7%, closing at 696.31
FTSE -3.92%, closing at 5204.20
DAX -2.74%, closing at 6064.16
CAC 40 -3.78%, closing at 4168.97
NIKKEI 225 -4.95%, closing at 11609.72
Shanghai Comp -4.18%, closing at 1992.76
JSE Alsi -2%, closing at 25,642

Mark Mobius on investing in China & India

2008-09-09T07:17:00.000-07:00

According to Dr Mark Mobius, director at Templeton Asset Management Ltd, Stocks in China and India offer ``good bargains`` after benchmark indexes in the nations declined more than any other major market this year.

``We`ve been rearranging the portfolio based on valuations, which have come down pretty dramatically in places like India and China,`` Mobius, who oversees about $47 billion of emerging- market equities as executive chairman of Templeton, said late last month.

Mobius joins investor Jim Rogers (previously co-manager of the Quantum Fund together with George Soros & author of the book "Investment Biker")in favoring Chinese stocks after they plunged 46 percent this year. China and India, the two most populous nations, are the worst performers among the world`s 20 largest stock markets as soaring raw material prices and slowing economic growth weigh on profits. Last year, China`s main index surged 162 percent and India`s advanced 47 percent.

China`s CSI 300 Index is valued at 21 times reported earnings, near the lowest in more than two years, and down from a peak of 53 times in October 2007. In India, the Sensitive Index is trading at 14 times reported earnings, down from a high of 31 earlier this year. That compares to a multiple of about 22 times for the Standard & Poor`s 500 Index in the U.S.

Rogers, who said he hasn`t sold any of the Chinese equities he started buying 1999, told investors on June 28 not to ``give up`` on the nation`s stock markets.

Marc Faber, publisher of the Gloom, Boom & Doom Report, disagrees. The investor who advocated bailing out of U.S. stocks before 1987`s so-called Black Monday crash and correctly predicted last August the U.S. would enter a bear market, said on July 4 that investors betting on a rebound in China`s tumbling stocks are setting themselves up for more losses. Since then, the CSI 300 has gained 6.2 percent.

Is the time right for South Africans to invest offshore?

2008-09-08T02:28:00.000-07:00

Guy Monson, investment head at Sarasin & Partners in London (who manage the Nedgroup Investments' Global Balanced Fund), says that the current fiscal stance is good for markets. He expects that the share prices of big companies should deliver solid returns following the credit crisis going forward.

Monson says the value of shares in the US is now the lowest the past 13 years and in the UK the weakest the past 38 years.

In the UK, he says that a recovery in the share market will however depend on what the central bank does. If interest rates are lowered - and judged by the state of the property market, there is little choice - share prices will rally.

Corporate profits are still increasingly (robust), dividend payments are being hiked and cash flows are strong.

On top of that he says that portfolio managers are sitting on big heaps of cash and are ready to move at any sign of a recovery. Monson reckons the managers now have the same levels of cash as in 2003, just before the rally on the share markets started.

He is also positive about emerging markets and say that these markets offer outstanding opportunities. He plans to increase his exposure to these markets by mid-2009. What do you think? Is he onto something or is he using a banned substance?

Remember that it is often the best time to buy share when all hope of an upturn finally seems to have been dashed.

The Cost of Using Bonds to House Your Offshore Funds

2008-09-04T03:26:00.000-07:00

The argument as to whether to use an offshore bond to house your funds or not is a very relevant one for South African (and other) investors with overseas portfolios.

Some jurisdictions have tax regimes which have become complex and also rather draconian. This has led to life assurers based in those countries putting much time, effort and money into designing suitable, tax efficient offshore bond products for the use of their clients with offshore money.

Investment advisors who wish to grow their clients' funds with the least amount of erosion from admin charges will tend to prefer the direct route of investment. That is, they will not recommend using bonds to house the various offshore funds but will rather go directly to the fund management houses to select the funds. This immediately cuts out a layer of cost which they may deem unnecessary.

This does create a bit more of an admin burden on the advisor, but he/she does need to do something to earn his/her trail fee now doesn't he? Going the direct route also allows him/her more freedom in the selection of the funds which he deems suitable to his client's risk profile as many offshore bonds have a finite list of "acceptable" funds which the advisor may use.

The "bond supporters" will say that there are many good reasons for using offshore bonds, such as delaying tax, putting sums in trust and you do not have to account annually for the income and capital gains accumulated. This means that you do not have annual accountant costs eating into the investment like you might with a directly held portfolio. Some of these are valid points.

A directly held portfolio of offshore funds needs to be structured in such a way that it does not require regular fiddling and switching to achive the investor's objectives. If it is not structured in this way and the investor wishes to make some pretty major changes, he/she could be in for some pretty nasty capital gains taxes.

This decision depends therefore on your jurisdiction, your investment style as well as the type (tax status)of the funds you have invested in. It also depends on whether the investor fears tax more than he/she does losing out on extra performance.

Tax Amendments Affecting Retirement Funds & Living Annuities

2008-08-29T02:18:00.000-07:00

Pension and Provident Preservation Funds:

Previously SARS did not have a definition for a Preservation Fund. According to the recently published draft Revenue Laws Amendment Bill, Preservation Funds may now be approved as Preservation Funds as long as they amend their rules accordingly by the 30th of September 2008.

The new bill has also changed the following:
Transfers to and between Preservation Funds no longer require an employer/employee relationship.

The options available to beneficiaries at the death of the member have been increased. Previously the beneficiary was only allowed to take cash payment within six months of the death of the member. Now, when a member of a pension preservation fund dies, the dependants/nominees can choose to receive the death benefit as an annuity or a lumpsum payment. If no dependants are found and no beneficiaries were nominated the death benefit can now be paid to the deceased member's estate as a lumpsum.

Transfers of divorce benefits to Preservation Funds.

A non-member spouse is now able to transfer the pension interest allocated to him/her in terms of a divorce order to a Preservation fund of his/her choice.

Retirement age of a member.

Members no longer have to retire from the fund on the first day of the month in which they turn 70 years old. A member's retirement date will depend on the rules of the fund.

The rules of most funds have been changed to have an open-ended retirement date.

Retirement Annuities:

The options available to beneficiaries at the death of the member.

Previously when a member of a retirement annuity fund died, the beneficiary was only allowed to take a maximum of 1/3rd of the death benefit in cash within six months of the death of the member.

Now:
When a member dies the dependants/nominees can choose to receive the death benefit as an annuity or a lumpsum payment. The maximum cash amount of 1/3rd and the maximum period of six months have been removed.

The death benefit can now also be paid to the deceased member's estate as a lumpsum if no dependants are found and no beneficiaries have been nominated.

Retirement of a member.

Members no longer have to retire from the fund on the first day of the month in which they turn 70 years old. A member's retirement date will depend on the rules of the fund.

Emigration.

Members who emigrate can now withdraw their full benefit and do not have to wait until their retirement date to access their benefit in the retirement annuity fund. However, the full benefit is taxable.

Recent Commodity Price Trends

2008-08-28T07:28:00.000-07:00

Prices of most commodities have dropped since their peaks around the middle of this year. Some have dropped back to levels of a year ago. The question to ask is: Could this merely be indicating a large correction on the upward trend or is it an indication that this bullrun is nearing its end?

The answer has important implications for resource rich economies like SA and Australia as commodity prices will affect their export earnings and the value of their currencies.

The broad trend is shown in the CRB commodities index, a widely watched measure of global commodity prices. This index has fallen almost 20% since reaching a record high on July 6.

Commodity % Change from August 2003 % Change from 2008 Highpoint
Aluminium 88 -16
Copper 343 -9
Ferrochrome 357 0
Ferromanganese 448 -6
Gold 123 -18
Lead 286 -50
Maize 154 -21
Managanese Ore 779 0
Nickel 118 -60
Oil 280 -17
Palladium 54 -49
Platinum 95 -34
Rhodium 820 -61
Stainless Steel 171 -23
Uranium 476 -53
Vanadium 764 -8
Wheat 139 -25

Prices as at 22Aug Source: I-Net Bridge

Our Updated Website

2008-08-27T12:58:00.000-07:00

Take a look at our new updated website at: www.offshoreinvesting.co.za

The content is up to date and contains new information about the offshore investment industry.

In addition, clients have access to online valuations through the use of a PIN and password.

Have a look & give us your feedback

Weekly Markets Week 34

2008-08-27T12:36:00.000-07:00

Weekly Markets - 25/08/08 – US banking liquidity still worrying analysts even more

The week from a global perspective

U.S. stocks fell, sending the Standard & Poor's 500 Index to its first weekly decline since July, as oil prices climbed and concern grew that the government may bail out Fannie Mae and Freddie Mac.

European stocks ended sharply higher, lifted by a rebound in financial shares on the prospect that U.S. investment bank Lehman Brothers might be bought, while oil eased to around $118 a barrel.

Asian stocks rallied the most in four weeks on Friday, after a poor few days earlier, led by carmakers and airlines, as oil's biggest plunge in four years eased concern that rising energy costs and faster inflation will erode earnings.

Crude oil was little changed after falling the most in three years as BP Plc restarted flows through a Caspian Sea pipeline and as the dollar gained against the euro.

The gains in crude oil and the marked drop in the U.S. currency bolstered precious metals, with gold rising 2.7% as bargain-hunters swooped in to buy the metal.

The US$ rose to a two-year high against Sterling this morning after data last week showed Britain’s economy was stalling, raising prospects of an interest rate cut by the Bank of England.

The week from a South African perspective
The JSE ended slightly lower last week after a better session on Friday inspired by gains in overseas markets, but it came off from its intraday highs as precious metals pulled back along with crude oil prices. After spending most of the day in positive territory in tandem with stronger world markets, South African near-dated futures closed lower on Friday as metal prices retreated along with crude oil prices.
June-delivery platinum jumped 3.8% to close at $1,343 an ounce on the Tokyo Commodity Exchange.
The Rand remained steady around its firmer levels on Friday, in quiet trading conditions ahead of the weekend. The local unit traded between the 7.65 and 7.69 levels for much of the session, holding onto gains made in the previous trading session on Thursday.

The week ahead

Tuesday
- Washington, US Federal Reserve issues the minutes from its 5 August meeting
- Singapore, 40th Association of Southeast Asian Nations meeting of economic ministers

Wednesday
- Pretoria, Stats SA releases July consumer inflation data

Thursday
- Pretoria, Stats SA releases July producer inflation data

Friday
- Pretoria, SA Reserve Bank releases July credit and money supply data
- Pretoria, SA Revenus Service releases July trade account data
- US, Early close (16.00 GMT) of the US fixed income markets ahead of Labour Day

Launch of HEP's Entrepreneur Incubator

2008-08-04T06:08:00.000-07:00

Please see below an announcement from our associates, HEP:

Press Release – The HEP Entrepreneur Incubator

4th August 2008

Human Energy Programmes, HEP, announce the launch of The Entrepreneur Incubator Programme this month.

HEP, involved in human development, enables people to grow in all facets of life. HEP offers excellent programmes in

Entrepreneurial and Leadership Coaching, Relationship Mentoring and Health, and Wellness Coaching.

With their motto: Helping You Get Life, they have helped individuals, families and companies make significant and

successful changes. “It has been a long road to this point but we are ready to help tackle the problem of sustainable

job creation in Southern Africa,” says Entrepreneurial Coach, Bruce Wade.

The programme offers a phased development cycle for new starts in the business world. It provides a well-defined

roadmap to success with personal support for the entrepreneur, so as to avoid the pitfalls in small business.

HEP offer a pre-incubator workshops designed for those who are thinking about starting their own business.

For those who have a firm business idea or have already started, HEP also offers the multi-level Incubation Programme

where entrepreneurs can apply for their businesses to be reviewed and then be invited onto the programme at the

appropriate level. On this programme, each business owner will receive Personal Coaching, Business Development

Structures and attend a joint teaching and networking workshop each quarter. This offers the business owner

a defined structure for growth and expansion whilst simultaneously providing a firm foundation.

HEP Incubator includes access to a Crack Squad of professional consultants who are experts in their field,

whether legal, financial, design, marketing or labour. Each Crack Squad member is committed to offering the

same nurturing support to HEP clients at a reduced rate.

Businesses can apply to be reviewed, and if they meet the criteria, will be promoted to the next level of the incubator

system for further growth and structural opportunities.

“We are very excited about having the opportunity to be a part of the new economy in South Africa,” says Bruce,

“We hope to have a positive impact on the lives of many new business owners as they embark on the road to building

successful businesses”.

More information is available from their website www.HEPincubator.co.za

Weekly Markets

2008-08-04T05:43:00.000-07:00

Weekly Markets - 03/08/08 – Markets cannot sustain the short recovery

2007/12/31 Index Name 2008/07/27 2008/08/02 Week % YTD % 12 Month Rolling %
13365.87 Dow Jones IA 11,370.69 11,326.32 -0.39 -15.26 -14.08
2674.46 NASDAQComp 2,310.53 2,310.96 0.02 -13.59 -7.98
1478.49 S&P 500 1,257.76 1,260.31 0.20 -14.76 -12.05
854.78 Russell 3000 735.13 737.56 0.33 -13.71 -11.00
8067.32 Frankfurt DAX 6,436.71 6,396.46 -0.63 -20.71 -13.98
6476.90 London FTSE 5,352.60 5,354.70 0.04 -17.33 -13.97
5627.25 Paris CAC 40 4,377.18 4,314.34 -1.44 -23.33 -22.93
15307.78 Tokyo NIK 225 13,334.76 13,094.59 -1.80 -14.46 -22.88
5261.56 ShanghaiComp 2,865.10 2,801.82 -2.21 -46.75 -38.57
29635.00 Jhb ALSI 26,996.00 26,505.00 -1.82 -10.56 -3.90
838.48 Gold $/oz 929.25 910.80 -1.99 8.63 35.84
94.16 Oil $/barrel 123.72 123.34 -0.31 30.99 64.10
6.82 Rand/US$ 7.58 7.26 4.22 -6.45 -2.54
13.58 Rand/Sterling 15.06 14.30 5.05 -5.30 0.90
10.04 Rand/Euro 11.87 11.25 5.22 -12.05 -15.38
1.993 $/Sterling 1.99 1.98 0.50 0.65 2.94
1.473 $/Euro 1.57 1.56 0.96 -5.57 -12.68
112.420 Yen/$ 107.90 108.23 -0.31 3.73 8.30
1.353 Euro/Sterling 1.27 1.27 0.00 6.13 14.19

The week from a global perspective

Concerns inglobal equity markets over slow growth seem to be dominating the market. Yesterday's US GDP data showed that the economy expanded 1.9% qoq between March and June. Although, a respectable figure, it was lower than market expectations (2.3% qoq). The main driver of growth, as expected, has been the export sector, while the fiscal stimulus helped personal consumption to increase 1.5% from the previous quarter. In addition, continued weakness in the labour market will still weigh on the economy.

On Wednesday 30th July, President Bush signed into law a sweeping rescue package aimed at resurrecting the US housing market from its worst slump since the Great Depression and stabilizing the two largest mortgage finance companies. The new law launches a $300 billion government initiative to refinance troubled mortgages, and boosts oversight of Fannie Mae and Freddie Mac, which own or guarantee almost half the country's $12 trillion in home mortgage debt.

The Fed has extended the Primary Dealer Credit Facility, the access it granted investment banks to its discount window emergency cash around the time of the Bear Stearns rescue, until Jan. 30. It has extended another credit, called the Term Securities Lending Facility and which is also designed for investment banks, by the same amount of time. In addition, it is offering to auction options on the TSLF around tricky funding periods like quarter-end, and is introducing an 84-day Term Auction Facility to compliment an existing 28-day TAF, and has increased its swap line with the European Central Bank. All of these liquidity measures announced on Wednesday 30th July continue the process of healing the severely injured global credit markets.

In Europe, the ECB continues to face a dilemma as it deals with a slowing economy and higher inflation. This past week economic confidence, a leading indicator for economic growth, dropped a staggering 5 points in July to levels not seen since 2002. While prices continued to increase in July, even as oil prices stabilized, inflation reached a new high at 4.1%.

The US$ fell slightly from near a five-week high against the Euro this morning as oil prices jumped above $126 a barrel, surrendering some of the gains scored last week after data showed US companies cutting fewer workers than expected.

Crude oil prices rose on renewed tensions over Iran's nuclear program and strong refiner buying in gasoline.

The week from a South African perspective

The JSE ended deep in the red following similar drops in overseas markets, with miners among the worst causalities on tumbling commodity prices. South African near-dated futures plummeted as a combination of a strong rand, a downturn on Wall Street and a slide in the platinum price conspired to drag the market lower.
Gold traded little changed above $900 in Asia this morning as the US$ held near a one-month high against the Euro and Yen, while crude oil prices rose, boosting demand for haven investments.

Platinum group metals got knocked to their lowest levels in half a year as a massive quarterly loss reported by General Motors added to worries about the auto sector that were already pulling down prices.
The Rand continued to firm against the US$ on Friday, hitting a new 6-month high around the R7.26 level, boosted by a strong performance by emerging market currencies and investor appetite for risk. The likelihood of it maintaining these levels is very low with equity market sentiment turning negative again. As far as the headlines over the weekend about Thabo Mbeki’s involvement in bribes during the arms deal, surely this can only weaken the local currency? That said, foreign investors don’t seem too perturbed about this sort of news, all they seem to act on is news which could lead to them losing their own money.
South African bonds were firmer late afternoon on Friday, buoyed by the firmer Rand and some short covering.

The week ahead

Monday
- Johannesburg, NAAMSA releases July new vehicle sales data

Tuesday
- Washington, US Fed holds its one day meeting on interest rates
- Sydney, Reserve Bank of Australia board meeting and interest rate decision

Wednesday
- Johannesburg, COSATU plans a national strike against job cuts related to power shortages & against high fuel and food costs!?

Thursday
- Pretoria, Stats SA releases June manufacturing data
- Pretoria, SA Reserve Bank releases July reserves data
- London, Bank of England monetary policy committee announces interest rate decision
- Frankfurt, ECB governing council meeting followed by interest rate announcement

Friday
- Beijing, The Olympic Games begin (to 24 August)

Xenophobic Behaviour Damages South Africa's Reputation

2008-05-26T11:36:00.001-07:00

The current violence against foreigners in South Africa has been allowed to escalate over the past several months ever since stores owned by Somalis were burnt down around the country some months ago.

The authorities have mismanaged the refugee issue and Mbeki's cowardly handling of the Zimbabwe crisis has just made things worse.

South African township dwellers feel that these so-called outsiders are receiving services and sometimes housing which they feel are due to them. This is because of the poor rate of service delivery by the various govt departments.

What is making matters worse is that the police are not helping the foreigners as they are seen to be reluctant to side against their own compatriots in this conflict.

The racism which has resulted is as bad as we saw during the apartheid regime's days which is extremely sad. No-one ever thought that they'd see this in the "Rainbow Nation" again.

First world investors do not pay much attention to "low intensity crises" such as these in Africa as these crises do not place their investments at risk at this stage.

From a moral point of view, however, overseas investors should be disinvesting as a serious token of their condemnation of the way in which South Africans and the govt are behaving.

The 2010 "African" World Cup now seems like a charade. No self-respecting (non-South African) Africans will want to be associated with an event hosted by the country which has allowed their countrymen to be attacked and violated in this way.

Zimbabwe Crisis places Southern African markets at risk

2008-04-14T22:22:00.000-07:00

While the despot Robert Mugabe remains in control of the armed forces in neighbouring Zimbabwe, thereby stalling any chance of a recovery beginning in that beleaguered country, South Africa and its other African trading partners will be tarred with the same brush by the First World. The situation perpetuates the perception that Africans do not hold their leaders accountable, but rather look up to them because of their positions instead of their abilities and capabilities.

Thabo Mbeki has shown that he is merely one of Mugabe's pawns and has no desire whatsoever to pressure him to resign.

It is high time that the South African government, (the ANC), stands up and clearly demonstrates its intention to respect the democratic rights of the Zimbabwean people by assisting them in this crisis. If it doesn't do so, the international community will begin to realise that the post apartheid regime is not much better than the racist apartheid one that preceded it.