Welcome to Matters of Mind

Left to right: Sanisha Packirisamy – Economist at Momentum Investments, Janine Horn - Financial Adviser at Momentum and Siphelelisiwe Msane – FASSA and Associate Director at Deloitte

Siphelelisiwe (Mpanza) Msane, FASSA and Associate Director at Deloitte was interviewed a few years ago and I recall that a student asked her “What makes a well-rounded actuary?” To this she replied, “A well rounded person makes a well rounded actuary!” This is absolutely true, and she also went on to say that she reads a lot every day – not only directly about what she is working on, but widely and deeply about the world, the economy, related fields and society.  Take a tip from Siphelelisiwe and nurture yourself through developing self-awareness and reading more broadly on a daily basis.

This week the National Budget as presented by Minister Enoch Godongwana is a highlight with a few articles to choose from. Read them all!  They each have a different emphasis and the first is a quick round up for a high level appraisal. Another topic is a discussion on reigning in the unregulated world of crypto. What are your thoughts about financial regulation?  Does it liberate and protect or inhibit and control?

International and local economic news; geopolitical events

South Africa’s 2023 budget in a nutshell

Finance minister Enoch Godongwana delivered the 2023 National Budget Speech on Wednesday, 22 February.

The budget touched on many points and topics, including the country’s current economic standing, its growth estimates, the energy sector and the continual struggle to cope with the indebted power utility Eskom, new tax proposals and the social wage.

4 min high level read of the budget.

Major debt relief for Eskom eclipses the budget

There was a broadly positive response from fixed income and currency markets, with government pledging significant financial support to energy utility Eskom. Given no tax implications (no fuel levy increase and only inflation-related increases in sin taxes), full compensation for bracket creep (R15.7 billion) and inflation-related increases in grants, the outcome for South African (SA) equities should be largely favourable.

Sanisha Packirisamy – Economist at Momentum Investments provides an in depth review of the budget with insight on how it would play out in various sectors and for different citizens. 8 min must read.

Momentum's Financial Experts Weigh In on the 2023 Budget Speech

A great read from nine experts in different areas of the business. Both the upside and downside are explored. 5 min read.

Warning over a different kind of blackout at Eskom: expert

Energy expert Chris Yelland believes that the hasty exit of Eskom chief executive Andre de Ruyter is the start of a difficult transition for the embattled power utility that is likely to see escalating levels of government interference and a clamp down on information.

We must Insist that we are not left in the dark, 3 min read.

Reserve Bank planning for a national grid collapse

The South African Reserve Bank (SARB), through the Financial Sector Contingency Forum (FSCF), is preparing contingencies for a national grid failure.

While the central bank stressed that it is unlikely that a regional or national grid failure could occur, as part of its mandate to maintain financial stability in the country, it must look into such systemic risks.

3 min read.

Federal financial management: How governments can do more with the budgets they have

Tools that enable more agile and transparent financial management can help government leaders tie resources directly to mission outcomes, boosting the impact of taxpayer funds.

Macroeconomics is not always easy to grasp, this article shows how governments can be more agile and transparent. 10 min quality read.

Frankenstein’s monster – will interest rate hikes work to kill inflation?

During a brief 48-hour window in late September 2022, a slew of central banks acted to raise interest rates in excess of a combined 600 basis points (6%) across the world – namely Sweden (+1%), the US (+0.75%), the Philippines (+0.5%), Indonesia (+0.5%), Taiwan (+0.125%), Switzerland (+0.75%), Norway (+0.5%), England (+0.5%), Vietnam (+1%) and South Africa (+0.75%).  

An interesting article on whether inflation can be curbed through higher interest rates – is the question answered?  4min read.Insurance and related industry highlights

Extreme inflation and natural disasters call for disciplined risk management

The combined impact of economic and geopolitical crises is causing virtually unprecedented levels of complexity in the business environment for primary insurers and reinsurers worldwide. High inflation in particular is having a profound effect on loss expectancy in many operating segments. Also feeding into the equation are the changing landscape for risks such as cyber and climate change, and the fallout from the coronavirus pandemic, which is still perceptible in some areas.

The article covers each of the themes mentioned in the introduction. It is good article providing the overall impact of these themes on insurers and reinsurers. 10min read.

Watch out world says CEO Schalk Malan after Brightrock’s founders sell 100% to Sanlam

Just shy of 13 years ago, Schalk Malan, Suzanne Stevens, and Sean Hanlon gave up executive jobs at Discovery Holdings to launch an insurance start-up. This week their business, now SA’s preferred life insurance company for independent financial advisors, became a wholly owned subsidiary of Bellville-based giant Sanlam. Alec Hogg of BizNews asked CEO Schalk Malan the obvious – and not such apparent questions. For his part, Malan reckons access to Sanlam’s large capital base will accelerate Brightrock’s impressive growth trajectory. This suggests that competitors, like the Brightrock trio’s former employer Discovery, best pay attention. 16 min radio interview or a 5 min read.

Sanlam Investments CEO resigns after Absa merger completion

Meanwhile, the firm has promoted head of absolute return Natasha Narsingh to lead its active management business.

Catch up on the news! 2 min read.

Investments

Includes Banking, Cryptocurrency, ESG and opinions on investing.

Global financial markets are flying – but who knows for how long

What a difference a new year can make. By the end of 2022, markets were moribund and sentiment was dire. At the end of the worst year for investors in nine decades, 2023 was meant to be a grim slog of stubborn inflation giving way to a crunching recession.

The first few weeks of the new year could not have been more different. 

The key US benchmark, the S&P 500, is now 15% up from its October lows, with the tech-heavy Nasdaq 17% higher in a couple of weeks. 

The writer refers to Bitcoin as “the standard bearer of risk sentiment” – I love that. What do you think this means? 3 min read.

Why these top allocators see more value globally than in SA

Rezco has pushed up the foreign allocations in both of its multi-asset high equity products.

For seasoned readers you may recall that we spoke about “a multi-asset class” last week. This article shows you how Rezco is favouring allocations in a clear graphic to support its rationale and a range of outcomes that could result from a recession that many are expecting. Investing is not for the feint hearted! A good accompaniment to the article above. 4 min read.

US crackdown seeks to push crypto back to the fringes of finance

The increasingly aggressive posture, which has taken shape through public and private actions in the weeks since the collapse of crypto exchange FTX, could push the industry to the fringes of finance. It means new ventures may be smothered before they get off the ground, and banks and digital-asset companies are likely to scrap existing ones and upend business models.

Is it hype that crypto will be regulated and new entries will suffer or is it a natural progression to protect the banking sector under the guise of the broader finance sector? It may not be either of these. What are your thoughts on regulating crypto? 5min read.

Fintech, digitisation and AI

Includes Insurtech

As ChatGPT’s Popularity Explodes, U.S. Lawmakers Take an Interest

ChatGPT, a fast-growing artificial intelligence program, has drawn praise for its ability to write answers quickly to a wide range of queries, and attracted U.S. lawmakers’ attention with questions about its impact on national security and education.

Have you used ChatGPT? Interesting response when the writer asked ChatGPT how it should be regulated. 3 min read.

ChatGPT is a data privacy nightmare. If you’ve ever posted online, you ought to be concerned

Some experts believe ChatGPT is a tipping point for AI – a realisation of technological development that can revolutionise the way we work, learn, write and even think. Its potential benefits notwithstanding, we must remember OpenAI is a private, for-profit company whose interests and commercial imperatives do not necessarily align with greater societal needs.

This article opens up the discussion to ethical considerations and exploitation. 3.5 min read.

Embrace it or reject it? Academics disagree about ChatGPT

From suggestions to ban ChatGPT, an artificial intelligence (AI) chatbot, to adjusting curricula and assessment formats, the academic community in North Africa, as in other parts of the world, disagrees about how the higher education sector should respond to the latest text tool.

6 min read of the pros and cons of ChatGPT for academia.

Google’s new AI chatbot takes on ChatGPT

Google is testing its newly developed conversational artificial intelligence (AI)-powered chatbot, Apprentice Bard, which is expected to rival AI start-up OpenAI’s ChatGPT.

2,5 min read.

Getty Images Lawsuit Says Stability AI Misused Photos to Train AI

A short article to get you thinking about data in the public domain for everyone’s use. The related article AI Tools Can Create New Images, but Who Is the Real Artist? poses an ethical question and some artists respond to it. This is a 4 min read.

How AI Can Transform Insureds’ Lives in 2023

Artificial intelligence (AI) has been a popular topic of year-end prediction articles in recent years. Looking ahead in 2023, I offer a viewpoint that goes beyond the marketing buzz with my forecasts of the value insurers could realize from AI and the potential impacts these AI implementations will have on their customers.

Practical ideas from Robert Clark. 3.5 min read.

Climate change

Includes impact on nature.

EU considers ban on ‘forever chemicals’, urges search for alternatives

The European Union on Tuesday started to consider a proposal to ban widely used substances known as PFAS or "forever chemicals" in what could become the bloc's most extensive piece of regulation of the chemical industry.

It is quite a process to change the way industry produces chemicals that save and destroy lives. It is interesting to observe the steps involved. Regulation is easy to introduce, enforcing it and altering patterns is much harder. 3 min read.

News at a glance: Diversity in STEM degrees, risky glacial lakes, and low-carbon construction

Get a round up on the latest in science brought to you by Science Magazine.  The update will take you 10 min to read.

Health care and related topics

Surgery risks are disproportionately high for women in Africa - new study

Improving surgical care for women in low- and middle-income countries is a global health priority. It’s also critical for sustainable development because of the critical role women play in macro-economic growth, community well-being, and as part of the healthcare workforce.

…But the outcomes of other kinds of surgery for women in Africa have remained under-examined. Women need equitable surgical care throughout their lives – not just during childbirth.

An enlightening read providing alarming comparisons. 4 min read.

About YOU

Author Talks: How to stay healthy no matter what

One would expect a book on health to focus on the clinical, on exercise, or on healthy eating. We address that, of course, but then we go much broader than that. We present mental models and biological processes, and we shed light on tools and traps that are all around us.

There is much we can gain from taking this interview seriously, maybe even buying the book, but at least two critical questions are answered; why it is important to understand how you feel about your own health and what impact toxic stress load (TSL) has on longevity. The credibility comes from the immense amount of pertinent data collected that allows Alex Jadad and Tamen Jadad-Garcia to draw their conclusions. 6min read (or watch the short videos on the site)

Maths that will help you as an adult: from baking a cake to asking for a pay rise

Are you thinking that you are too bright to make use of these simple tricks that help us to adjust to everyday situations?  We’re geared for the complex and can be stymied by the simple. Be open to learning something new that is easy to use. A fun 3.5 min read.