21 March Human Rights Day in SA

This week's edition could not be posted without recognition of Human Rights Day. 

Please ponder for a moment the impact of that day on our present day Democracy and spare a thought for those killed and injured. 

Global economic news - local impact

China’s impending financial crisis will have a ripple effect on South Africa

One of China’s biggest property development companies, Evergrande, found itself in a financial crisis when it missed its interest payment deadline to international investors in September 2021. 

This sparked a panic in the global investing world, as these things usually do. Evergrande’s missed deadline exposed its debt liabilities, estimated at more than $300-billion. This makes Evergrande the most indebted property company in the world. 

News from September 2021 will be reaching its impact on SA soon. Read this to understand why we will be impacted and how. It is an opinion piece so keep your mind open and read other articles on the same topic. 3 min read

SA faces growing inflation and food price spikes in wake of Russia-Ukraine war – two top economists

We are three weeks into the Russia-Ukraine conflict and already its impact is being felt in South Africa. In the past week, South Africa has experienced the first major load shedding for 2022, with Eskom stating its emergency diesel supply, needed to keep turbines running, will soon be unaffordable. 

3 min 30 sec read

Ukraine war’s surprising links to the 2008 financial crisis – and the parallels with 1939

The historical parallels are uncanny. A decade or so after the two most devastating financial crises in modern capitalism, in 1929 and in 2008, a terrible conflict begins in Europe that threatens to draw in the entire world. So far, the Ukraine war is obviously of a different order to the second world war, but the clash of ideologies is just as fundamental.

If these parallels have not attracted a great deal of attention, I suspect it is because on the surface, they do not make a great deal of sense. The key is to realise that major financial crises and wars are both symptomatic of deeper structural problems in societies – underlying tectonic movements that created those fractures on the surface.

What I like about this article is that it asks you to think laterally and engage with events from the past that we should be learning from. This a a skill which is useful to develop to solve actuarial problems. Recognise patterns as well as impact. A 4 min read available below in .pdf

Industry news

FSCA to exempt non-life brokers from clawbacks when a policy is voided because of non-disclosure

The FSCA has proposed amending the Short-term Insurance Act regulations to exempt independent intermediaries from commission clawbacks when a policy is voided because of material misrepresentation or non-disclosure by the policyholder.

Find out more about what happens when a policy is cancelled. Note the use of the "clawback" and understand what it means in insurance. 3 min 30 sec read

Life insurers with the most and least satisfied customers

Absa Life has the most satisfied clients among the country’s major life insurers, according to Consulta’s latest South African Customer Satisfaction Index for Life Insurance.

The index is based on a survey of more than 2 100 customers of the country’s largest life insurers by market share during the last quarter of 2021.

Have a look at the ratings. Do you think 2 100 customers is a big enough pool to draw from? What data that is provided or not provided would support your answer? 4 min read

FIC fines Krugerrand, motor dealers more than R12 million

The Financial Intelligence Centre (FIC) this month imposed administrative sanctions against a Krugerrand dealer and seven motor vehicle dealerships for non-compliance with the Financial Intelligence Centre Act.

The FIC said the imposition of an administrative sanction does not imply that an institution has facilitated money laundering or terrorism funding transactions.

A short article placed here so that you can be acquainted with the regulatory institution FIC and the implications of non-compliance with the FIC Act. 2 min 30 sec read 

Santam phasing out BI cover for power cuts

Santam, South Africa’s leading non-life insurer, issued an “operational circular” on 15 March that could have a significant impact on commercial clients’ existing cover for business interruption resulting from extended cover for losses emanating from public utilities and/or public telecommunications.

Wow, it looks like the range of insurable events is being narrowed to those unlikely to occur. What factors have led to this change? Are there any factors that have not been mentioned in the article that you believe would have influenced this change? 4 min 30 sec read

Policyholders, investors ‘should be extra vigilant’ following TransUnion data breach

The Association for Savings and Investment South Africa (Asisa) has cautioned policyholders and investors to expect an increase in phishing attempts and approaches from criminals impersonating representatives from life insurers and investment companies following the data breach at TransUnion South Africa last week.

3 min 30 sec read. 

Info Regulator reads riot act to TransUnion over hack

The Information Regulator is unhappy with how embattled credit bureau TransUnion is handling the data breach it suffered, exposing about 54 million personal details to cyber criminals.

The enforcer of South Africa’s data privacy law − the Protection of Personal Information Act (POPIA) − on Tuesday met with the beleaguered credit bureau to get a clear understanding of how the hack transpired, as well as the ramifications.

Now that we live in a digital world we have a host of risks to cater for. What would you have done if you were in TransUnion's shoes? 4 minute read. 

Healthcare 

Summary of views on the proposed health funding model presented to Parliament

Parliament recently concluded public hearings on the NHI Bill. This article is the first in a series which will provide expert analysis of different submissions made on different aspects of the bill. It examines the views that were presented on the financing proposals in the bill.

An eight minute read. It is a very emotive topic and most who presented their views felt that there is not enough detail on the costing. What are your feelings about the NHI? What are the facts you have that would support your view? 

Health system problems: time to make the difficult choices up front

A non-negotiable priority right now before any meaningful work can be done to sort out the healthcare problems in South Africa must be breaching the trust deficit that exists between the private and the public sector.

This would be a good counterpoint to the article above. 3 min 30 sec read.

Deltacron: what scientists know so far about this new hybrid coronavirus

In many countries, as restrictions lift and freedoms are restored, there’s a general feeling that the pandemic is over. There is, however, still the significant concern that a dangerous new variant could emerge.

This happened when omicron arrived, but we got lucky with that one. Omicron turned out to be more transmissible, but mercifully it hasn’t caused an increase in severe disease in most countries where it is dominant.

But this wasn’t guaranteed. Variants crop up randomly, and new ones have the potential to be more dangerous than previous ones. Another has just arrived, and is currently going by the name deltacron. It is – as you can probably guess – a hybrid of delta and omicron, the two variants dominant most recently.

Keep abreast of the latest research on COVID -19 variants before you drop your guard. A 4 min read available below in .pdf

Investments 

‘Our SA Inc tilt brought us close to the top’: Old Mutual Investments

MD Khaya Gobodo says the insurance giant’s investment arm is now genuinely independent.

Gobodo said Old Mutual Investments is still the largest domestic asset manager with R809.1bn under management. Third-party funds increased by 16% to R254.6bn, and intergroup (sometimes called life) funds increased by 15% to R554.5bn.

Time to look at the different forms of management in Investments. This is Asset Management. Article gives some of the annual figures which are pleasing. 2 min 30 sec read

Morningstar Awards: SA’s best large asset manager is a passive house, two years in a row

Satrix once again comes out tops at the Morningstar Awards, which were otherwise dominated by boutiques.

For the second year running, Satrix Investments has been named as the best fund house – larger fund range at the Morningstar Awards. This award is presented to the firm with the best risk-adjusted return for the past five years across its entire fund range.

This is news which our quantitative students may find more interesting, although we can all become acquainted with the terminology and the managers. 3 min read

Reg 28 changes: Ninety One, Coro and Truffle all unlikely to increase offshore exposure right now

'Local equities remain more attractive than global'.

While South African pension funds and Regulation 28 compliant unit trusts are now able to go 45% offshore, some top fund managers are not moving assets straight away.

Read more about why local equities are more attractive currently than offshore equities. 4 min 30 sec read

SA unit trust investors ‘more risk averse’ than foreign counterparts

South African investors are far more risk averse than their foreign counterparts, with only 19% of local collective investment scheme (CIS) assets in equity portfolios compared with 47% for all international CIS assets, says Sunette Mulder, the senior policy adviser at the Association for Savings and Investment South Africa (Asisa).

What factors do you think would make SA investors more risk averse than their foreign counterparts? An interesting read with figures that tell the story. 4 min 30 sec read

Hedge fund industry grows assets to R86.93 billion

Assets under management (AUM) by regulated hedge funds in South Africa grew 19%, while the number of funds continued to decline last year, according to figures released by the Association for Savings and Investment South Africa (Asisa).

Another article exposing you to financial instruments and their performances. It also briefly describes hedge fund strategies in SA. 4 min read

Ark Innovation ETF: The destruction of shareholder value

The ETF has sold off substantially more than the general market, losing a whopping 60% since topping out last year, of which, 32% has occurred year-to-date.

Global & Local Asset Management use the “Avoid the Human Factor” strategy to manage our collective investment scheme portfolios. The strategy focuses on managing portfolios like an actuary and not a portfolio manager.

This very interesting article analyses Ark Innovation ETF performance over the past two years and substantiates the the use of "Avoid the Human Factor" as a more viable alternative to increase shareholder value. 8 min read

Cryptocurrency: When to invest, regulations and more…

There is no doubt that cryptocurrencies have seen remarkable growth over the past few years, with Bitcoin and Ether capturing majority of the market share. Spurred on by Blockchain technology and the creation of new and more interesting cryptocurrencies, the digital asset landscape is just now starting to ramp up.

Give more time and attention to Cryptocurrency so that you can be sure you know why you're investing or not. 4 min read

Technology and the financial services sector 

New financial laws to shake up SA’s fintech sector

SA has seen the introduction of new frameworks and amended laws, which have resulted in more stringent regulation of fintech services, including the Financial Intelligence Centre Act, Pension Funds Act, Protection of Personal Information Act and Insurance Act.

Government is in the process of introducing the Conduct of Financial Institutions (COFI) Bill, which will consolidate the conduct standards of financial institutions. It is aimed at protecting financial customers, promoting the fair treatment and protection of financial customers by financial institutions, as well as supporting fair, transparent and efficient financial markets, among other objectives.

Understand the regulatory landscape by getting to know the various acts that govern different sectors. 4 min read

SA banks fear uptick in ID theft after TransUnion hack

The South African Banking Risk Information Centre (Sabric) industry body is co-ordinating with the banking sector to ensure South Africans’ personal information is not abused by the hackers that broke into the IT systems of credit bureau TransUnion.

Last week, ITWeb broke the news that the hacker group, going by the name N4ughtysecTU, which claims to hail from Brazil, breached TransUnion and accessed 54 million personal records of South Africans.

A frightening reality confronts us with a hack of this magnitude. 4 min 30 sec read

SA participates in central bank digital currency project

The Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank today announced the completion of prototypes for a common platform enabling international settlements using multiple central bank digital currencies (mCBDCs).

“While many unknowns remain, and a number of areas still require further investigation, it is only through our collective understanding and journeying together that we can meaningfully contribute to the G20 roadmap for enhancing cross-border payments. We are privileged to be part of this pioneering piece of work.”  Rashad Cassim, deputy governor of the South African Reserve Bank.

An exciting project. Do you know what the reference to G20 means? 3 min 30 sec read

Investec debuts Programmable Banking

Investec has introduced Programmable Banking to enable its tech-savvy clients to programme their own banking experience. 

Programmable Banking will also give developers the opportunity to integrate and connect with Investec’s developer community in collaboration with OfferZen.

According to the financial services giant, the application programming interface (API) channel is an evolution of its Web and mobile channels, and enables access to transactional data in real time directly from the client system. 

I wonder who OfferZen is? Do you think that this facility is wise after hearing the news of the TransUnion hack? 3 min read

Australian insurtech firm descends on SA

Australian insurtech firm BizCover has landed in SA, targeting small, medium and micro-enterprises (SMMEs) with its Bi-me marketplace, which it says makes it easier for local start-ups to be insured.

Bi-me is a digital broker that provides business insurance to SMMEs, and is set to change the face of business insurance in the country, claims BizCover.

Get to know how your industry can respond to the needs of small businesses using the latest technology to hand and be at the forefront of change. 3 min 30 sec read

Climate change impact 

Delivering sustainable water management, ESG goals with IOT

Nowadays, there can be no sustainable future without an effective and efficient approach to holistic water management. Measuring the flow of water through its cycle of collection, storage, distribution, consumption and purification is foundational to enabling a data-driven and analytical approach to water management and usage – in various industrial, commercial, residential and public sector segments.

As this is world water month, we can spare a thought for this incredible life source that we take for granted. Will clean water also enter the Insurance spectrum as a potential product offering? 3 min 30 sec read

U.N. panel warns of global warming's toll on humans and nature

Impacts will be worst for ecosystems and humanity's most vulnerable

Over the past 70 years, humanity has made great strides on a number of metrics: increasing life expectancy, cutting hunger and disease, boosting education levels. But a prime engine of these gains—the burning of fossil fuels—now threatens to slow down global development, according to a new report today from the United Nations’s Intergovernmental Panel on Climate Change (IPCC).

An article giving us the most salient points of the urgency to address climate change. 4 min read 

About you

James Clear quotes Physician Chris Ballas, more commonly known under his pen name The Last Psychiatrist, on the goal of adulthood:

"The goal of adulthood is to let go of the other possible existences and to make the best of the one. A successful adult is one who understands that it doesn't matter which life you ultimately pick, only that you live it well."

Source: A Surprising Number Of Teens Think They'll Die Young, Or Live Forever, Whichever Comes First

News of war can impact your mental health — here’s how to cope

People far from the conflict may be wondering why their mental health is suffering as a result of the news and images they’re seeing. Part of this can be explained by the fact that our brains are designed to scan for threats to protect us from potential danger. This can lead to an almost unstoppable, constant scouring of the news to help us prepare for the worst – a phenomenon many might know better as “doomscrolling”.

Pick up the skills that are suggested in this article as they are useful in maintaining general well being. 4 min read available in .pdf below. 

The OODA Loop: How Fighter Pilots Make Fast and Accurate Decisions

The OODA Loop is a four-step process for making effective decisions in high-stakes situations. It involves collecting relevant information, recognizing potential biases, deciding, and acting, then repeating the process with new information. Read on to learn how to use the OODA Loop.

When we want to learn how to make rational decisions under pressure, it can be helpful to look at the techniques people use in extreme situations. If they work in the most drastic scenarios, they have a good chance of being effective in more typical ones.

Applying the OODA Loop

“We can’t just look at our own personal experiences or use the same mental recipes over and over again; we’ve got to look at other disciplines and activities and relate or connect them to what we know from our experiences and the strategic world we live in.” —John Boyd

This is an 11 minute read and a great framework to adopt in your academic and professional career.  Another good read from Farnham Street Blog.