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Welcome to Mind Matters 18 October 2021
ASSA Annual Convention
Discovery CEO on why it doesn’t pay to be overly negative about South Africa
Discovery chief executive Adrian Gore says that there are a number of pressing issues that need to be addressed in South Africa – but that people who have negative blinkers on can often miss the opportunities available in the country.
In a social media post outlining a presentation to the Actuarial Society of South Africa (ASSA), Gore said South Africa has urgent issues including a high rate of unemployment, inequality and poverty.
A short one and a half minute read, but listen carefully to the message.
Actuaries must stick to what they know, industry leader says about Covid-19 involvement
Actuaries that have commented or make incorrect predictions about Covid-19 in public need to have humility and admit when they’ve made mistakes, the incoming president of the country’s actuarial society said on Thursday.
Tjaart Esterhuyse, the president-elect of the Actuarial Society of South Africa (ASSA), pointed out that actuaries have a "moral imperative" to always apply proper actuarial principles and methods and to stick to their fields of expertise before making public statements.
This is a two minute read. Esterhuyse elaborates on what that moral imperative is.
COVID related articles
264,809 deaths later: Covid-19’s terrifying toll on South Africa, almost three times the official figure
How does South Africa measure the scale of its Covid-19 epidemic? ‘Corpses are the one certainty. From the outset, scientists knew that counting deaths would give us the most accurate information about what is happening with the Covid epidemic in South Africa.’ That’s according to Tom Moultrie, professor of demography and director of the Centre for Actuarial Research at the University of Cape Town.
Based on the MRC data, recent reports and comparison with other countries’ excess death data now reveal that South Africa has been one of the worst-affected countries in the world. As the table below illustrates, we have a far higher proportion of excess deaths than either the US or the United Kingdom.
A comprehensive account of how the death rate is calculated and where we stand globally. A four minute read.
Low case numbers enable long-term stable pandemic control without lockdowns
Abstract
The traditional long-term solutions for epidemic control involve eradication or population immunity. Here, we analytically derive the existence of a third viable solution: a stable equilibrium at low case numbers, where test-trace-and-isolate policies partially compensate for local spreading events and only moderate restrictions remain necessary. In this equilibrium, daily cases stabilize around ten or fewer new infections per million people. However, stability is endangered if restrictions are relaxed or case numbers grow too high. The latter destabilization marks a tipping point beyond which the spread self-accelerates. We show that a lockdown can re establish control and that recurring lockdowns are not necessary given sustained, moderate contact reduction. We illustrate how this strategy profits from vaccination and helps mitigate variants of concern. This strategy reduces cumulative cases (and fatalities) four times more than strategies that only avoid hospital collapse. In the long term, immunization, large-scale testing, and international coordination will further facilitate control.
This is a full paper, and now with research from having lived through almost two years of the pandemic we can say that moderate restrictions would suffice. As the saying goes; hindsight is perfect science!
Inflation and stagflation
Inflation Surges Worldwide as Covid-19 Lockdowns End and Supply Chains Can’t Cope
The big question for the global economy: Will price rises feed further inflation cycles?
Rising inflation is triggering anxiety around the world as a surge in demand following the easing of Covid-19 lockdowns has been confronted by supply bottlenecks and rising prices of energy and raw materials.
The sharpest consumer-price increases in years in many countries have evoked different responses from central banks. More than a dozen have raised interest rates but two that haven’t are those that loom largest over the global economy: the Federal Reserve and the European Central Bank.
A Wall Street Journal article of four and a half minutes covering several countries' responses to rising prices.
What Is Stagflation?
Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).
This is a frightening place to be in, most definitions include "relatively high unemployment rate" and we're sitting very high currently.
This is a good four minute read and one which I would recommend as we consider the SA economy at present. It is very important that we avoid this situation because there is no quick cure in getting out of it.
Nobel prize winners and commentary
Using models to study behavior
Economics studies the production, distribution and consumption of goods and services. And so, like other social sciences, economics is fundamentally interested in human behavior.
But humans behave in a wide variety of often hard-to-predict ways, with countless complications. As a result, economists rely on abstraction and theory to create models in hopes of representing and explaining the complex world that they are studying. This emphasis on complicated mathematical models, theory and abstraction has made economics a lot less accessible to the general public than other social sciences, such as psychology or sociology.
David Card, an economist at the University of California, Berkeley, and one of this year’s Nobel winners, and the late Alan Krueger used a natural experiment to show that, in the real world, the law of supply and demand doesn't always follow. This article goes into the messiness of this "law".
Nobel Prize for groundbreaking way of building molecules that made chemistry greener
Benjamin List and David MacMillan, respectively based in Germany and the US, will share the 10 million Swedish kronor (£870,000) Nobel prize in chemistry 2021 for their development of “organocatalysis” – a precise tool for constructing molecules which has boosted pharmaceutical research and made chemistry greener and cheaper.
Their research dates back to 2000, when the chemists independently developed the first steps of what today is called “asymmetric organocatalysis”, which is the activation of chemical reactions by small organic molecules.
That's a lot of money isn't it? A four minute read. Another fundamental underpinning of the rationale for the Nobel Prizes - an appreciation for greener alternatives.
Explaining the 2021 Nobel prizes: how touch works, a better way to make medicine and the fiction of Abdulrazak Gurnah – podcast
Six prize announcements later, 12 men and one woman from 11 countries are now settling down to their new lives as Nobel laureates. In this episode of The Conversation Weekly, we delve into the scientific discoveries around touch and organic catalysts awarded the 2021 prizes in medicine and chemistry. And we talk to a friend and collaborator of Abdulrazak Gurnah, the Tanzanian writer awarded the Nobel prize for literature.
This is an interesting 44 minute podcast available on 13 different platforms - take your pick.
The rarity of female Nobel laureates raises questions about women’s exclusion from education and careers in science and the undervaluing of women’s contributions on science teams. Women researchers have come a long way over the past century, but there’s overwhelming evidence that women remain underrepresented in the STEM fields of science, technology, engineering and math.
Studies have shown that those women who persist in these careers face explicit and implicit barriers to advancement. Bias is most intense in fields that are dominated by men, where women lack a critical mass of representation and are often viewed as tokens or outsiders. This bias is even more intense for transgender women and nonbinary individuals.
This four minute article shows clearly how come men still dominate the field. Male or female, it really makes you think about your own biases and how purposeful one has to be to avoid perpetuating them.
Insurance in the news
Insurance: Transforming risk and compliance
As economies emerge from the pandemic and plan for the next decade of growth, insurance companies need to rethink the strategic function of risk.
In the decade between the global financial crisis and the COVID-19 pandemic, many insurance companies focused their risk and compliance activities on protecting themselves from downside risks and meeting ever-evolving regulatory requirements. Today, a significant transformation is gaining steam as insurers must reinvent themselves in the multiyear reality of COVID-19, increased levels of uncertainty, pressures for efficiency, and the need to be resilient and relevant by tapping new sources of growth. The risk and compliance functions are expected not only to go on protecting insurance companies from downside risks but also to shift toward providing them with strategic advice to support growth (for instance, new business) and change (such as company-wide cost and tech transformations).
A bigger picture of what insurers face and a must read to know the industry you are a part of. A ten minute read also available below to read on the site.
Time for IFAs to put income protection at top of the agenda
“As an industry, we should educate our clients about the need to protect themselves against their most likely risks, which are injury, illness and critical illness. It’s important for clients to protect their monthly income stream so that they can claim when they need it most,” Wells adds.
Critical as it is, income protection currently makes up only 6% of all individual risk policies written by the industry – as opposed to nearly 50% of all individual risk policies written by advisers who support FMI.
A three minute read. Well done FMI advisers!
Protect your income first
On FMI’s version it seems fairly ‘cut and dried’ that your client’s income should be protected before worrying about their lump sum death and disability needs; but there are two sides to every story. We are sure that financial advisers will offer compelling arguments why lump sum cover is indispensable too. Why do financial advisers seem to favour death, disability and severe illness covers over income protection?
This article by Gareth Stokes is far more detailed than the one above and analyses the claims experience across the industry and FMI. It offers good insight. A six minute read.
ESG Matters
Let's Talk About COP: 'Every country has a vested interest'
Citywire temporarily rebrands its ESG podcast to find out what asset managers think about the upcoming climate summit.
Our first guest is Eoin Murray, chief investment officer of Federated Hermes’ international business, who said the number-one priority for everyone involved in climate science is to agree on the rulebook that will determine exactly how Paris Agreement targets are implemented.
This is a 27 minute podcast available on Spotify.
Allan Gray, Old Mutual back Sasol’s rejection of the climate lobbying resolution
Just Share and Aeon said Old Mutual's support of Sasol's 'slow' climate action was alarming.
Allan Gray and Old Mutual Investment Group portfolio managers with funds holding significant stakes in Sasol have backed the company’s rejection of the climate lobbying resolutions submitted by two other shareholders.
In September, Aeon Investment Management and non-profit shareholder activism organisation Just Share co-filed the resolution with Sasol. However, the company rejected the resolution as it said that the disclosure in Sasol’s climate change report (CCR) for the year ended June 2021 largely complied with the resolution’s requirements.
This is a four minute read and you should note the varying arguments presented by investment managers and houses. Is 2050 too late to be carbon neutral ?
STEPHEN CRANSTON: Beware the ESG hype
Right now, many companies and fund managers see a rich seam of PR opportunities in the environmental, social and governance (ESG) space.
It is always nice to think that your investments aren’t just helping you build up a decent pension but also helping to save the planet. And for CEOs it seems to show that conscious capitalism works...
This article is reserved for Business Live Premium Viewers, but should be a good complement to the other two articles above if you can get hold of it.
FinTech
Bank Zero is ‘now fully open for business’
South Africa's newest digital bank, Bank Zero, says it has experienced rapid uptake in customer sign-ups and steady growth in card transactions since it officially launched in August.
The Bank Zero mobile app caters for South African businesses with a small turnover to the billions; however, the bank says it does not on-board listed companies and public sector-linked companies.
A three minute read - so many digital banks to choose from!
Virtual cards gain traction in South Africa
wo of the big-four banks have recorded strong growth in the use of virtual cards, as more South African consumers shift to digitally-driven payment methods.
Standard Bank says physical card uptake in 2020 slowed significantly, down over 50% from 2019. Meanwhile, the number of virtual cards issued grew by over 400% in 2020.
“We’re seeing a similar trend in 2021, with more than 24 000 virtual cards issued year-to-date,” says Arno von Helden, co-founder and head of Standard Bank’s forex app Shyft.
Do you know what a virtual card is and how it works? This three and a half minute article may help you to understand that and help to build a picture of where technology is taking banking.
Luno sees accelerated growth as customers reach 9m
Home-grown crypto-currency exchange Luno now has nine million customers spanning over 40 countries.
Luno says it added one million new customers in the four months since June, with 30% of these based in SA.
A short article but good info on the local crypto-currency exchange.
Naspers propels M&A activity in Sub-Saharan Africa
South Africa-based consumer internet company Naspers boosted merger and acquisition (M&A) activity in Sub-Saharan Africa during the first nine months of 2021.
This is according to Refinitiv, a global provider of financial market data and infrastructure, in its report – Sub-Saharan African investment banking analysis for the first nine months of 2021.
Why would you read this article? Because it helps paint the Naspers - Prosus picture more fully and it shows you the revenue generated from the various types of fees versus growth in the banking sector. A four minute read.
Discovery Bank’s R1bn loss in line with expectations, says CEO
Discovery Bank CEO Hylton Kallner says he was not surprised when the bank posted an operating loss of R1.094 billion last month. He adds the bank continues to invest heavily in innovative products and services to reach long-term growth projections.
Last month, the digital-only player, owned by Discovery Health, SA’s largest health insurer, posted 7% lower results for the year-ended June, compared to the previous reporting period.
Apparently it takes about five years before a digital bank achieves break even point. Read this four and a half minute article to gain a better understanding of how Discovery Bank measures its success thus far.
Vodacom super app VodaPay goes live
“What we have delivered in VodaPay is a first-of-its-kind super app underpinned by world-class technology that will help us to make digital and financial inclusion a reality. We took no shortcuts in the development of our super app,” says Mariam Cassim, chief officer of Vodacom Financial and Digital Services.
A three minute read.
Merges and acquisitions
Stanlib announces strategic partnership with JP Morgan Asset Management
Part of the arrangement will see Stanlib distributing JP Morgan’s products in South Africa.
Stanlib and JPMorgan Asset Management (JPMAM) have announced the formation of a strategic partnership that will bring a broader product set to local investors.
As part of the arrangement, JPMAM will become Stanlib’s primary strategic offshore partner. This will see JPMAM ‘providing investment management capabilities to complement Stanlib’s existing offshore offering,’ the groups said in a statement. ‘Stanlib will retain full ownership of the construction of the overall investment capabilities and product offerings.’
A two minute read.
‘Big and serious’: Stanlib and JPMorgan AM explain how their partnership will work
Stanlib CEO Derrick Msibi believes the agreement will be ‘a significant contribution to the competitiveness of the South African asset management industry.’
‘From the time I joined it became very clear to me that Stanlib needed to look at extending its partnerships, for two reasons,’ Msibi said. ‘The first is that South African investors are looking for very compelling propositions, particularly for offshore money. So, Stanlib is looking for a suitable and reliable partner to do that for us.
‘Secondly, we are looking at a broader relationship with an offshore partner – someone who has scale, who can offer the business a lot more than just managing portfolios. We are looking for someone who is open about knowledge sharing.’
A very interesting five minute read. This does give you insight into why they have partnered with each other.
All about you
Focused and Diffuse: Two Modes of Thinking
Our brains employ two modes of thinking to tackle any large task: focused and diffuse. Both are equally valuable but serve very different purposes. To do your best work, you need to master both.
"As she lost consciousness of outer things … her mind kept throwing up from its depths, scenes, and names, and sayings, and memories and ideas, like a fountain spurting."
— Virginia Woolf, To the Lighthouse
We are constantly in pursuit of true periods of focus – deep work, flow states, and highly productive sessions where we see tangible results. Much of the learning process occurs during the focused mode of thinking. The diffuse mode is equally important to understand and pursue.
A beautiful piece because it is a lesson that we need to learn not to stay in focused mode at the expense of sub optimal learning and creativity. A six minute read.
The Lie We Tell Ourselves About Going to Bed Early
To get better sleep, stop treating it like a chore.
For many people, the cruelest part of daily life is the transition between wakefulness and sleep. When you should be sleeping, you want to be awake; when you should be awake, you want to stay asleep. It is easy to regard sleep as a torment: hard to attain and then hard to give up, day after day after day.
This is a delightful article with practical advice, a five minutes read.
Why do we wake around 3am and dwell on our fears and shortcomings?
When I wake at 3am or so, I’m prone to picking on myself. And I know I’m not the only one who does this. A friend of mine calls 3am thoughts “barbed-wire thinking”, because you can get caught in it.
The thoughts are often distressing and punitive. Strikingly, these concerns vaporise in the daylight, proving that the 3am thinking was completely irrational and unproductive.
This is a very good four minute read and available below courtesy of The Conversation and Creative Commons Licensing.
PW#804: What’s worry doing for you?
Are you ever undone by writing anxiety? Take some straightforward steps now to get this monster off your back!
I’m lucky enough not to feel debilitating anxiety. Sure, I get nervous about things from time to time. But I don’t get that racing-pulse-sweating-palms-heart-in-the-throat feeling that my life is going to end soon because I need to do (or not do) something.
This four minute newsletter is by Daphne Gray-Grant, a publication coach and writer. She gives such useful advice and although it is for writing you can apply it to your studies too. I apply it to my work!