Content begins here
Main page content
Click to collapse
Welcome to MM week of 25 April 2022
Global and local news
Copper to Iron Ore Rebound as China Vows to Support Economy
The country’s central bank vowed to increase monetary support to the real economy, especially for industries and small businesses hit hard by the pandemic, it said in a statement on Tuesday. That follows the People’s Bank of China’s decision Monday to cut the amount of money that banks need to have in reserve for their foreign currency holdings, an attempt to help limit the drop in the yuan.
China is the second largest economy in the world - larger economies have huge influence on smaller economies like ours. Can you see the connection? 2 min read
Andre Cilliers makes sense of confusing Rand influences – from KZN Riots and Chinese lockdowns to higher inflation
In this podcast, TreasuryONE’s Andre Cilliers shares his insight into the likely currency movements, putting his excellent recent forecasting record at risk. The currency strategist unpacks the reasons for the rand’s volatility, why SA’s exchange rate moves in bands, and the danger points to watch out for. Cilliers also provides some understanding of the impact three major global issues are likely to have on the local currency.
Listen or watch on YouTube. 13 min 45 sec
No reason for central banks to panic (for now) over higher inflation
South Africa’s consumer price index is following the universal trend of steadily increasing, but at a markedly slower rate than many of its key trading partners.
This article is more upbeat about inflation in SA than a few others on the page. Try identify where the differences are. 4 min 30 sec read
Analysts are worried more unrest could be about to hit South Africa – here’s why
South Africa’s escalating joblessness, combined with elevated consumer price inflation, is heightening social stability risks in the country, says professional services firm PwC.
Insurance companies have also warned that South Africa cannot afford the cost of a repeat of the July 2021 riots in the coming years.
This article was chosen because the trends reported have led to unrest before. Something that insurers and investors would want to take note of. Observe the predictions of three possible scenarios. 2 min 30 sec read
Insurance - where is it heading?
Why Carriers Aren’t Being Commoditized, but Value-ized
Big tech companies with relevant consumer data have been eyeing the insurance industry for the past few years and looking at how they can use their insights into customer behavior to reinvent the sector and undercut carriers on prices. Understandably, incumbent carrier leaders are concerned about the threat of disruption via commoditization.
This is a good read to gain a bigger picture of how insurers compete with one another and how they can stay ahead of the disruptors. It is an article from Carrier Management usually reserved for members only. 4 min read
Lloyds’ CFO Keese Sees Inflation as Biggest Challenge for Insurers in 2022
The insurance industry has faced myriad disrupters during the past several years, ranging from the ongoing effects of a global pandemic to climate risks to technological advancements. However, the biggest challenge for the insurance industry in 2022 will be an emerging risk: inflation.
That’s according to Burkhard Keese, chief financial officer and chief operating officer at Lloyd’s.
“[Inflation] is by far the biggest challenge,” he told Carrier Management. “It is, for me, like toothpaste. Once the toothpaste is out of the tube, you can’t get it in again. And that’s what people need to understand, and that’s the reason why this is an emerging risk.”
This is a great interview because there is much that you can learn about insurance over the past few years and handling the risks faced in the future, through the iconic insurer Lloyds. 8 min read
Industry news
How financially sound is the Government Employees’ Pension Fund?
The extraordinary rise in the value of the JSE between March 2020 and March 2021 stemmed three years of declining values within the Government Employees’ Pension Fund (GEPF) and has placed it in a sound financial position as far as short-term commitments are concerned.
However, it is unlikely that investors will see another year where the JSE rises by 55%, which makes the long-term soundness of the fund even more important.
Important read because this fund is the biggest in the country and a defined benefit scheme. The Board of Trustees need to take care of the long term viability of the fund. Find out about solvency reserve and the FSCA. 4 min read
GEPF’s 2021 actuarial valuation released
The last valuation was carried out as at 2018, and the next valuation date will be 2023.
This report was prepared in accordance with the Government Employees Pension Law, which requires that the fund’s financial condition be investigated and reported upon by a valuator at least once every three years.
More detail for you to contemplate on the soundness of the fund. 3 min read
Business Talk – Monocle’s Rheta du Preez on South Africa’s financial regulatory landscape
In this episode of Business Talk, du Preez explains how her global experience has shaped her abilities and knowledge in her current role.
She discusses regulatory areas in the financial sector where South Africa is actually ahead of the curve – particularly when it comes to RDARR and Basel IV.
Du Preez then talks about the areas where South Africa lags behind European markets – including climate risk, sustainable finance, and deposit insurance.
An energetic and upbeat interview on YouTube 18 min 36 sec. Listen out for how Rheta has gained experience at Monocle which might interest you.
This is a pertinent issue that financial services firms around the world continue to struggle with, both here in the UK, where the Prudential Regulation Authority recently released its thematic findings on the topic, and overseas.
Read Rheta du Preez's post and check out the Webinar of the panel discussion that she refers to and that is freely available.
Health and healthcare
Home is where the health is – but healthcare systems are blind to households on the edge
For the past 17 years, the Durban-based shack dwellers’ movement, Abahlali baseMjondolo, has gathered on 27 April to mourn UnFreedom Day. Each time, they reaffirm that South Africa’s poor households are unfree because (among other things):
“The Commons (including the gifts of nature and culture, which should be accessible to all) have been segregated, privatised and exploited; tens of millions of the country’s residents live without a secure place to call home and raise a family; millions still live without sewage, water and electricity; and 47% of the country are struggling to find work or have stopped looking.”
Abahlali’s call registers an all-important reality: it is here, in the everyday life and conditions of South African homes, that our potential to realise the “freedoms” of this youthful democracy is either supported or dimmed.
Among the critical foundations for this freedom is our health. Sickness, along with its social, psychological, and financial consequences, is all too often a poverty trap, deepening inequality and thwarting intergenerational mobility.
A must read. The article breaks down how NCDs contribute to inequality and how critical it is for us to recognise this and do something about it. What are non - communicable diseases? 7 min 30 sec read.
Submissions: NHI Bill has serious constitutional and human rights implications
An assessment of 117 submissions to the public hearings on the contentious National Health Insurance Bill (NHI) – collated by the Parliamentary Monitoring Group and analysed by researchers from the SA Medical Research Council (SAMRC), Clinton Health Access Initiative and the universities of the Western Cape and Cape Town – found that most agreed that the Bill had serious constitutional problems.
A lengthy and important read if you want to stay informed on the NHI and implications for implementation. 15 min read
An interdict on Covid teen vaccination will harm basic education and violate pupils’ rights
The African Christian Democratic Party (ACDP) and its partners – Free the Children, Save the Nation NPC, the Caring Healthcare Workers Coalition and the Covid Care Alliance – are seeking to stop the roll-out of Covid-19 vaccines for adolescents urgently.
SECTION27 has intervened as amicus curiae (friend of the court) in the case to introduce evidence on the detrimental impacts of school closures on pupils’ wellbeing, with evidence from Professor Tom Moultrie, a professor of demography and director of the Centre for Actuarial Research at the University of Cape Town, Dr Sara Black, an academic at the Centre for Education Rights and Transformation at the University of Johannesburg, and Dr Shaheda Omar, the clinical director of the Teddy Bear Clinic for Abused Children.
SECTION27’s submissions raise a basic education-focused, rights-based approach, arguing that an interdict to the vaccine roll-out would infringe a pupil’s right to equality, basic education, health and basic nutrition.
How would you untangle the argument of "rights" in this case? 4 min read
Investments
Ninety One: You can have too much exposure offshore
Ninety One Opportunity fund is unlikely to be more than 37% invested in global equities
‘There is greater choice since the offshore limits have been increased to 45%,’ said Sumesh Chetty, co-manager of the Ninety One Cautious Managed fund, ‘but it is still important to balance risk and return’.
Speaking at a Ninety One webinar, Chetty said that in a high equity multi-asset portfolio, such as Ninety One Opportunity fund, the strategic allocation to global assets is unlikely to increase above 37%.
The article provide graphic comparison of these two funds. A reading that makes sense through the figures provided. 3 min read
Abax is concerned about impact of inflation on social instability
The fund manager believes any widespread social unrest in South Africa because of the rise in the cost of living would hurt equity markets.
The increase in grain prices could cause social instability worldwide, and such events could feed through and negatively affect investments.
‘South Africa is back at level four load shedding. The petrol and staple food prices will go through the roof. The yellow maize price is up R1,000 a ton, which is up 33% over a couple of months,’ Sedgwick said.
A 2 min 30 sec read bringing home the point of inflation, let's keep it down at all costs!
Melville Douglas: Why investing in social good is set for exponential growth
Derinia Mathura, manager of the Melville Douglas Global Impact fund, discusses how impact investing is poised to deliver a wave of growth.
The world is facing serious challenges. Today four billion people – almost two-thirds of the global population – experience severe water scarcity for at least one month of the year.
This is in no small part due to the climate change that sees the planet’s oceans warming at the rate of five atomic bombs every second. That is the equivalent of 3.6 billion nuclear bombs detonated over the past 25 years into the atmosphere. Globally, an area the size of London is being deforested every week, contributing to the amount of carbon dioxide now in our atmosphere being at a level last seen in prehistoric times.
This is an essential read, particularly if you are reluctant to believe in ESG as a viable growth metric. 3 min 30 sec read
Unit trusts and annuities
Tax can be a difficult maze to navigate for unit trust investors. Not only is there more than one type of tax applicable, but the types of products available in the market that invest in unit trusts are also taxed differently. Retirement products like retirement annuities do not pay tax on any of the returns from the unit trusts they are invested in. Investments that do not form part of your retirement saving do have the burden of tax and that includes unit trust investments.
Find out more about the types of tax applied to unit trusts outside of a retirement saving. 4 min read
The Financial Wellness Coach: Advice on drawdown rates, and living and life annuities
Question: I am 70 years old and have fallen behind with my bond repayments. I am now facing the possibility of losing my home, but I have sufficient capital in my living annuity. I’ve heard that one can cash in a living annuity if its value is less than R125,000. Is it possible to withdraw R125,000 from a living annuity if the value of the annuity is greater than R125,000?
This is a good question and the potential solutions help us understand the differences between living annuities and life annuities and some of the regulations around them. Follow the calculations - you'll love them! 4 min read
In-fund living annuities vs out-of-fund living annuities
The benefits and drawbacks of retiring within an existing employer’s fund versus retiring outside of the fund in a non-trustee-approved annuity.
National Treasury is concerned about the vast majority of employees losing the vital support structure provided by a retirement system while they are employed, after they retire. In addition, Treasury feels that the risk of poor financial advice and high charges in the retail market is too significant for the individual retiree.
Broaden and deepen your knowledge of living annuities with this article. 6 min read
How many people can retire comfortably in South Africa
Under-saving for retirement remains an issue in South Africa, and the majority of people cannot afford to retire, let alone continue to support their current lifestyle, a new study by Genesis Analytics and the Financial Sector Conduct Authority (FSCA) shows.
3 min read, good to read in conjunction with the other two articles above.
About you
Ramadan: a dietitian offers tips for healthy fasting
Ramadan is centred on prayer, the Qur’an, deep mindfulness and spiritual reflection.
Dr Nazeeia Sayed, spoke to Faaizah Laher, also a registered dietitian and a spokesperson for the Association for Dietetics in South Africa, about the healthiest approach to the fast.
An enlightening read. 3 min 30 sec
Insight
"When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles – generally three to twelve of them – that govern the field."
— John Reed
Why having fewer choices can help us make smarter decisions
Here’s how to cope with the paradox of choice.
A short read offering a lot of reflection. Something I chose to do this week with fewer articles :) 2 min read
Thirteen Things Science Says Will Make You Much Happier
It’s no secret that we’re obsessed with happiness. After all, the “pursuit of happiness” is even enshrined in the Declaration of Independence. But happiness is fleeting. How can we find it and keep it alive?
Psychologists at the University of California have discovered some fascinating things about happiness that could change your life.
Dr. Sonja Lyubomirsky is a psychology professor at the Riverside campus who is known among her peers as “the queen of happiness.” She began studying happiness as a grad student and never stopped, devoting her career to the subject.
One of her main discoveries is that we all have a happiness “set point.” When extremely positive or negative events happen—such as buying a bigger house or losing a job—they temporarily increase or decrease our happiness, but we eventually drift back to our set point.
Read this article and affirm your good habits and change the ones that are holding you back from a good set point! 5 min read