Welcome to Matters of Mind 24 March 2023

On 21 March we celebrated Human Rights Day. Ironically it sits heavy in the hearts of many that they are not free to be themselves. We have made so many advances as humankind and yet we cannot accept each other as fellow human beings without fear or favour. I am drawn once again to the poet Ijeoma Umebinyuo whose words above give hope for overcoming oppression. May we all fly freely alongside each other.

International and local economic news

Is The Widely Predicted Recession In The Developed World Still Coming?

Economic data prints over the last month have been confusing to say the least – in just three weeks the picture changed completely and market sentiment with it. While our industry is known for claiming how notoriously difficult markets and macroeconomics are to predict, in January even renowned economists like Larry Summers described the global growth picture as particularly difficult to read this time around. 

This is from a US perspective, but we all know that we are influenced by the American Federal Reserve monetary policy. Graphic depiction of trends.  4min read.  

Why inflation is moving in the wrong direction in South Africa

Inflation will likely be higher for longer as rising food costs and higher medical aid prices filter through the data in the coming months.

Consumer price inflation and core inflation rose in February against market expectations and after easing for three consecutive months, Stats SA reported this week.

Balanced account of the reading of inflation in SA currently. 4.5 min read with graphs.

A question for you: What does core inflation mean?

What South Africa can learn from China

South Africa and China were on the same development path until the early 1980s after which South Africa’s lack of investment in gross fixed capital formation (GFCF) delayed the country’s economic growth.

Specialist asset manager Futuregrowth said South Africa’s rate of investment in GFCF has declined for decades, while China’s has skyrocketed.

By all means let us invest in GFCF but also remember that infrastructure must be maintained, if not it begins to lose value as it loses functionality. 3 min read.

It’s Greylisting; not Blacklisting: South Africa deals head-on with Greylisting

It is one positive development for South Africa to celebrate – and there are several others – but the recent announcement that Stellantis, the umbrella automotive group housing motor car brands such as Citroën, Jeep, Opel, Peugeot, and Abarth, is planning to develop a car manufacturing facility in one of South Africa’s Industrial Development Zones (IDZ), comes as a relief for the country. This is particularly so considering the country’s greylisting by the Financial Action Task Force (FATF), only a few weeks ago.

Good news for SA’s economy! 3 min read.

Geopolitical news 

Ukraine war: Moldova could be the first domino in a new Russian plan for horizontal escalation

One of the consequences of Russia’s war in Ukraine is the fact that the Kremlin has lost a lot of its influence in former Soviet countries. This creates opportunities to limit Moscow’s ability to leverage its once dominant role to further its war aims. However, it also means that Russia is likely to raise the stakes and try to escalate tensions and confrontation across the region.

Important read to gain insight into how Russia is using dissent to increase its power in regions close to Ukraine and inside its old borders called “neighbourhood destabilisation” and how on the other hand the West is gathering support with countries opposing Russia. 5 min read.

Saudi-Iran deal won’t bring peace to the Middle East but will enhance China’s role as power broker

The deal, which was signed in Beijing, comes seven years after diplomatic relations were severed in the aftermath of the execution in Saudi Arabia of Shia cleric Nimr Al Nimr and has been heralded as a “game-changing moment” for the Middle East.

China is fast becoming the “dominant actor” across the Middle East, a region fraught with tensions for decades. Become acquainted with some of its issues as you observe China casting its influence over the area. 5 min read.

Eyeing China, Biden and allies unveil nuclear-powered submarine plan for Australia

Addressing a ceremony at the U.S. naval base on Monday in San Diego, accompanied by Australian Prime Minister Anthony Albanese and British Prime Minister Rishi Sunak, U.S. President Joe Biden called the agreement under the 2021 AUKUS partnership part of a shared commitment to a free-and-open Indo-Pacific region with two of America’s “most stalwart and capable allies.”

There appears to be a lot to get through to see this happen no sooner than the 2030s and, in the meantime, analysts say China may make its move on Taiwan or elsewhere in the region. 5 min read.

Putin tells Xi he’ll discuss China’s blueprint for Ukraine

For Putin, Xi is by far the most significant international leader to visit since the Feb. 24, 2022 invasion, which triggered Europe’s deadliest conflict since World War II and waves of sanctions by the US and its allies. Xi’s arrival comes just days after the International Criminal Court issued a warrant for Putin’s arrest on charges of war crimes. Russia has dismissed the move and China Monday called for the court to avoid politicization.

A three day visit to the Kremlin is a long one, but perhaps because of it Xi will succeed in brokering peace in the Ukraine. 4 min read.

Insurance and related industry highlights

Santam Acquires MTN South Africa Device Insurance Book

The acquisition, and alliance, is aimed to support MTN South Africa in broadening the reach of device protection to their clients, in line with the importance of devices in the lives of customers. MTN South Africa’s device insurance book currently has just over 400 000 policies and an annual Gross Written Premium value of nearly R400 million.

Partnerships of this nature can improve performance and output for both companies. Consider how the customer benefits from this enriched ecosystem. 3 min read.

Top insurance risks to guard against in 2023

There are several themes that are currently playing out in South Africa, which are keeping insurers awake at night. These themes are likely to impact the insured during 2023, and significantly affect those that either do not have the right cover in place, or even none at all.

Before you go to the article, make a list of four risks you believe are topmost for insurers and those insured. 4.5 min read.

Helios eyes load-shedding reprieve for SA’s telcos

Helios Towers is in talks with mobile network operators (MNOs) in SA about providing power-as-a-service to its sites in the country, says CEO Tom Greenwood.

This, as the independent telecoms infrastructure company looks to alleviate load-shedding’s detrimental impact on network infrastructure.

Where there is infrastructure there has to be insurance. What do you think about a potential partnership between Helios and an insurer? 5 min read.

Investments

Includes Banking, Cryptocurrency, ESG and opinions on investing.

Secret CEO: Credit Suisse ‘resolution’ has set a dangerous precedent

Our columnist argues the way in which the Swiss bank has been rescued undermines 15 years of regulatory reform.

Although three US banks folded in little more than a week, along with, arguably, the ‘resolution’ of a functioning bank, Credit Suisse (CS), this past weekend is a bigger kick in the teeth to the financial sector.

Insightful article, was Finma the Swiss regulatory body too quick to follow the persuasions of the Federal Reserve, ECB (European Central Bank) and BoE (Bank of England)?  3 min read.

Credit Suisse deal shows ‘valuation of bank stocks is voodoo’

The UBS takeover of Credit Suisse has shaken confidence in regulation to its roots, says the editor of Citywire Pulse.

Credit Suisse has had many issues in the past but, ultimately, there is only one explanation for the hasty deal ordered by the Swiss government and Swiss National Bank (SNB) this weekend – it would have gone into a disorderly bankruptcy. We would have had another Lehman on our hands.

You may recall last week’s article on Quantitative Easing (QE). Theory and practice are far from being aligned. This article is frightening, revealing that without proper monitoring, regulation is useless. 3 min read.

Bitcoin soars amid banking sector chaos

Turmoil in the banking sector, hotter-than expected inflation data, and renewed hopes for a dovish Federal Reserve has Bitcoin reaching levels not seen in about nine months.

2.5 min read.

Why Foord is avoiding SA nominal bonds in two of its fixed-income funds

Despite the tempting yield, Foord Asset Management is not following the herd when investing in nominal government bonds.

Farzana Bayat, co-portfolio manager of the Foord fixed income range, said that in 2015, the International Monetary Fund considered eight out of 50 countries in Africa at high risk of debt distress. This year 23 of the 50 countries are at high risk.

‘South Africa is ranked 15th among the most vulnerable countries to debt default, worse than Nigeria, Morocco and Turkey.’

3 min read.

Risk attitude versus return altitude

When it comes to investing, many investors simply want big rewards, without taking on any risk. But the reality is that to earn sufficient long-term returns, you do have to put your capital at some degree of risk. As they say, nothing ventured, nothing gained.  

Find out about “time horizon” and the five basic risk profiles when it comes to investing. Sound advice. 3 min read.

Fintech, digitisation and AI

Includes Insurtech, blockchain

PayShap must be free – Michael Jordaan

Former FNB CEO and venture capitalist Michael Jordaan said that prohibitively high transaction costs will stifle the adoption of PayShap.

A must read along with the article below. 3 min read.

Banks in Africa must become fully digital to survive – Huawei

This is one of the take-outs from the Huawei Intelligent Finance Summit 2023, hosted in Cape Town this week.

The Chinese multinational used the event to launch its 'Non Stop Banking’ initiative, which calls for collaboration between the ICT and banking industries. Huawei believes African banks must leverage advancement in mobile banking and fast-track full digitalisation to compete in the broader fintech market.

In this article the phrase “moving money at the speed of trust” was used. What do you think that means? Offer three suggestions before reading the article. 2.5 min read.

Impressed by your insurance app? You’ll be even more impressed once you learn what goes into it

Like a growing number of South Africans, your primary contact with your insurance product is probably through a smartphone app - whether it is an insurer’s app, your banking app or your favourite retailer’s app. With these apps, you can insure items in seconds, get discounts for engaging in behaviour that reduces your risk profile, and process claims immediately.

This charming accessible article shows us what goes into an app to make it simple to use. 3.5 min read.

AI-driven Vulavula to champion African languages

Newly opened artificial intelligence (AI) research and product lab Lelapa AI will go to market with its first natural language model solution, Vulavula, within the next two months.

So says co-founder and CEO Pelonomi Moiloa, explaining the start-up’s plans to build AI-based customer-facing products and services that solve uniquely African problems.

What an exciting project what an exciting co-founder! 4.5 min read.

Diversity, equity and inclusion

Includes women in work, finance and STEM.

LGBTQ+ rights: African Union watchdog goes back on its own word

The primary human rights watchdog in Africa recently made a decision that departed from its existing practice. The African Commission of Human and Peoples’ Rights, an independent expert body within the African Union (AU) framework, used sexual or gender identity as the reason it rejected applications for observer status from three non-governmental organisations (NGOs).

The author debates the validity of the above rejection by the African commission of Human and People’s Rights. The article shows depth of understanding of human rights and challenges the rationale used to reject the applications. 4 min read.

Alexforbes CEO: Our industry has transformed too slowly

The Association of Black Securities and Investment Professionals believes imposter syndrome exists among black professionals and women.

An honest look at transformation in asset management. 3 min read.

Climate change

 Don’t underestimate local leverage for closing the funding gap for climate change in SA, says author Adam Tooze

A shift away from a coal-dependent energy mix is in the best interest of South Africa, and its natural resource advantages places the country in a perfect position to do so. But who will pay and who will profit? It’s a question renowned historian and author Adam Tooze has been mulling over. He says more overseas funding is still achievable.

Let’s work on that funding! 3.5 min read.

‘It can be done. It must be done’: IPCC delivers definitive report on climate change, and where to now

The world is in deep trouble on climate change, but if we really put our shoulder to the wheel we can turn things around. Loosely, that’s the essence of today’s report by the Intergovernmental Panel on Climate Change (IPCC).

This is a must read, but let’s not be complacent about the fact that it can be done, it can only be done IF everyone pitches in. 10 min read.

Health care and related topics

Eastern Cape Health boosts legal teams to fight bogus medical claims

The Eastern Cape provincial Health Department is tackling bogus medical negligence team head on, beefing up its artillery of legal defences with a mass hiring of legal practitioners, according to spokesperson Sizwe Kupelo, who said it was not easy to retain staff due to the area’s rural nature.

This is very good news, let’s hope the trend is stopped before more money is misspent. 3 min read.

More younger people being diagnosed with colorectal cancer

Previously, colorectal cancer was associated mainly with the older generation; but recently there has been an increase in diagnoses and deaths among younger adults, ranging from their mid-20s to late 50s, and alarming the medical fraternity, which is urging more people to be screened.

This article cites US numbers but we can be on the lookout for its increase in SA. 3 min read.

Obesity should be treated as urgent 'gateway' medical condition, say experts

Data from the WHO show that 70% of the Saudi Arabian population has the highest percentage of the world’s obese or overweight adults, followed by the USA (68%), New Zealand (66%), Australia (65%), UK (64%), Argentina (63%) and South Africa (54%).

One of those eye opening articles. A preventable condition and yet it is so prevalent. 4 min read.

How genetic testing can change healthcare in South Africa

When we think of genes, we tend to think of how they pass down traits such as blue eyes, or a predisposition to developing a certain disease. And while this is certainly true, our genetic makeup is more complex than that.

Genes also relate to a much broader range of physical capabilities and traits, such as how you absorb nutrients, which sports you’ll perform better at, and even whether the medication a doctor prescribes for you will work efficiently. 

Enlightening 3-min read.

About YOU

“The biggest obstacle to increasing your self-awareness is the tendency to avoid the discomfort that comes from seeing yourself as you really are.”  Travis Bradberry

Tiny Thought

Things you control:

Your effort.
Your beliefs.
Your actions.
Your attitude.
Your integrity.
Your thoughts.
The food you eat.
How kind you are.
How reflective you are.
How thoughtful you are.
The type of friend you are.
The information you consume.
The people you surround yourself with.

From Shane Parrish of Farnam Street Blog. If you like it, you are invited to share it on Twitter.

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