Reflections
R
The Future World of Investing
Writer Mike Simpson
While no investor or asset manager has the advantage of a time machine to the future, the scenarios – both local and global – which are emerging for the next five, 10 or 15 years offer a clear indication of the tailwinds and headwinds worth focusing on
While South Africans have become used to a near-stagnant economy in the latter part of the Zuma years – with a paltry 0.7-1% GDP growth – the appointment of Cyril Ramaphosa as South African President will likely see growth improve to around 1.5% next year, rising to 2.5-3% in 2020.
“This year will still be sluggish because you can’t switch on the economy instantaneously, even though confidence is back. But we do see quite a significant pick-up over the course of the following two years,” says Kurt Benn, Head of Balanced Franchise at Absa Asset Management.
But there may be a caveat to the growth story, with Benn warning that if global growth slows down, we could see the brakes being put on the South African economy in two to three years’ time as it struggles under the weight of a global economic slowdown. “We sit in a world that’s starting to tighten liquidity and that could provide a headwind for all emerging markets,” he explains.
Azad Zangana, London-based Senior European Economist & Strategist at Schroders asset management company, is in partial agreement with Benn, but foresees a reasonably strong global economy for the next four years before growth slows and the risk of recession sets in.
• In the near term, the world is starting to tighten liquidity, which could provide a headwind for emerging economies.
• South Africa is likely to remain in a low- growth cycle, rising to 2.5-3% in 2020.
• Investors are unlikely to receive the pre- financial crisis returns they became used to prior to 2008, especially in fixed income and bonds.
• Equity markets are likely to see a very low return environment over the next five years.
• The outlook for South African growth over the next decade is positive, although our deep-seated structural problems will only be corrected over a 20-year timeframe.
• The global economy is likely to see reasonably good growth for the next two to three years, but factor in at least two recessions in the next 15 years.
• Responsible investing and a focus on issues like the environment, social concerns and corruption are likely to grow in favour as investors look to mitigate risk.
Gradient Issue 2 57
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76
