ISSUE NO. 2 // JUNE 2018
CONNECT MAGAZINE
THE FOLLY OF MARKET TIMING So, what should an investor’s allocation to risk assets be in a high conviction portfolio
SOUTH AFRICA'S ECONOMIC HISTORY The principle investors in the South African economy are South Africans ~Thabo Mbeki
EMERGING MARKETS BRACE FOR A TRADE-WAR Emerging-markets have become trickier to navigate as investors brace for outsized volatility
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Content
03 Editorial 05 Emerging Markets Brace For A Trade-War Blow-Out 07 South Africa's Economic History 12 The Folly Of Market Timing 16 Market Commentary 18 Time Off (Travel & Leisure Insert)
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Editorial Well, we are at the halfway stage of the year and time is certainly moving by rather swiftly,
Dion Desaunois
not to mention that these past six months have thrown a number of challenges into the
MANAGING DIRECTOR
mix. As South Africans we’re fighting each other
On a separate note, our rugby under the new
over land, racism and wages; unions are
coach, Rassie, is also looking very promising
marching and politicians are positioning in
and with his almost unorthodox approach, we
anticipation of the 2019 elections.
are certainly going to be very well prepared for the Rugby World Cup in Japan next year.
We have a new President who only a few months into the job, has made huge progress,
I trust that you will find this edition
particularly his handling of state capture.
enlightening.
What is quite surprising though is this has not gone unnoticed by the rating agencies, foreign investors and international press. PWM
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IF YOU ARE WORKING ON SOMETHING THAT YOU REALLY CARE ABOUT, YOU DON’T HAVE TO BE PUSHED. THE VISION PULLS YOU. STEVE JOBS
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EMERGING MARKETS BRACE FOR A TRADE-WAR BLOW-OUT AN ARTICLE WRITTEN FOR FIN24 BY NETTY ISMAIL, LILIAN KARUNUNGAN, JUSTIN VILLAMIL AND ALEX NICHOLSON
It may be starting to sound like a broken record for emerging markets, with the twists and turns of USChina trade tensions likely to dominate investor concerns this week. That’s not to say Federal Reserve Chairperson Jerome Powell’s two-day Congressional testimony and even the outcome of Monday’s meeting between Donald Trump and Vladimir Putin in Finland won’t have a part to play in driving sentiment. Emerging-markets have become trickier to navigate as investors brace for outsized volatility. The gap between a JPMorgan Chase & Co gauge of expected volatility in developing-nation currencies and a Group-of-Seven measure was at the highest level since 2011 at the end of last week. That’s depriving investors of a cheap way to protect against risks in emerging markets. “We remain concerned that the vicious cycle of tit-fortat tariffs may accelerate in the coming weeks,” said Piotr Matys, a strategist at Rabobank in London. “This in turn would fuel risk aversion, leaving various emerging-market currencies particularly vulnerable against the US dollar, which continues to benefit from capital outflows from emerging markets to US assets.”
Trade tensions are likely to get worse before they get better and Asian currencies such as South Korea’s won and Taiwan’s dollar are set to weaken further, Goldman Sachs Group strategists including New York-based Zach Pandl wrote in a July 13 note. Markets will be on the lookout for the resumption of negotiations over trade between the US and China after they exchanged retaliatory threats last week. Donald Trump raised the stakes on Tuesday by moving forward with plans to impose tariffs on another $200bn of Chinese imports. As if the trade tensions aren’t enough to contend with, investors will also keep an eye on the outcome of the Putin-Trump summit. The US president is under pressure to confront his counterpart once and for all after Special Counsel Robert Mueller indicted 12 Russian intelligence officers for hacking offenses designed to undermine the Democratic Party in the 2016 US presidential campaign. Though few investors expect a major thaw in relations, some have been buying Russian assets purely on the grounds that any meeting is better than no meeting at all. The ruble gained 0.7% last week, among the bestperforming developing-nation currencies. The US imposed its toughest sanctions to date in April as punishment for Moscow’s alleged elections meddling and Trump has said he will raise the matter of interference when the two leaders meet. Page 5
Powell key for dollar Powell’s testimony will be key for the dollar, according to NatWest Markets. The Fed chair will deliver his testimony to the Senate Committee on Tuesday and appears before the House panel the following day. Judging by recent data, “there is little reason for the Fed to sound hawkish”, said Henrik Gullberg, head of emerging-market trading strategy at Nomura International in London.
Indonesia, South Africa decide on rates
of steam,” Prakash Sakpal, an economist in Singapore at ING Groep NV, wrote in a July 12 note. “We aren’t expecting BI to use this weapon further, at least not in the forthcoming meeting.” South Africa’s central bank will also probably leave the benchmark repo rate unchanged at 6.5%, according to economists. The country statistics agency will publish inflation data for June on Wednesday, with the consumer price index seen rising to 4.8%, from 4.4% in May.
Worst performers Bank Indonesia will meet on Thursday to decide whether to proceed with a fourth rate increase this year to stem declines in the rupiah, which is hovering near its lowest level since October 2015. Central bank Governor Perry Warjiyo said on July 11 the depreciation of the currency is “under control” though it’s undervalued. BI has raised the seven-day reverse repo rate by a total of 100 basis points in the past two months. “BI’s interest-rate weapon for currency stability may have run out
The rand has climbed more than 3% this month, outperforming most of its peers. Market watchers view the yuan’s 6.70 level against the dollar as “a major pivot”, with the Chinese currency and stocks perceived as “major barometers of market sentiment” Rabobank’s Matys said. A breach of that level toward 6.80 would weigh on other emergingmarket currencies, he said. The yuan weakened for a fifth week, closing at 6.993 on Friday. Other
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than Turkey’s lira, Asian currencies were the worst-performers in emerging markets this month. The Argentine peso was by far the world’s worst performer in June, falling 14% before rallying in July. Traders will also be on the lookout for Brazil’s inflation data, especially after analysts surveyed by the central bank raised their 2018 projections for an eighth consecutive week. Prices are increasing amid the depreciation of the real, which makes imports costlier, and in the wake of a nationwide trucker strike that choked roads and pushed up prices of goods. The real has trailed other major currencies this year.
G20 Summit Latin America investors will focus on the G20 Summit in Buenos Aires, where finance ministers and central bank governors meet. Argentine President Mauricio Macri will preside over topics including trade wars, emerging-market turbulence and taxation of the digital economy. Page 6
SOUTH AFRICA'S
ECONOMIC HISTORY
The principle investors in the South African economy are South Africans. ~ Thabo Mbeki
South Africa is one of the most mineral rich countries in the world, with massive gold, diamond, coal, iron ore and platinum deposits spread across the country. It has vasts amounts of agricultural land and the ideal climate for the production of wheat and maize. Its climate also provides perfect conditions for wine making. During the Apartheid years, loads of sanctions were in place against South Africa. This necessitated that South Africa locally develop or manufacture goods that could not be imported - leading to a strong manufacturing industry within South Africa to supply the local market.
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The economy was however very closed and very little trade took place between South Africa and the rest of the world during the Apartheid years. Strict rules regarding the flow of money out of South Africa was in place too, leading to little money leaving the country. This in turn lead to the development of a very strong banking system in South Africa. Most of the technical and skilled labour was made up by white people as the Apartheid regime favoured the minority population. The same goes for access to education, water, electricity, health, transport routes etc. all leading to a very skew distribution of income and quality of live in South Africa. Page 7
So with the background provided we will now look at South Africa's economic history since the rise of democracy. This will include GDP growth rates, inflation and exchange rate performances per president of the Republic. The graph below provides a snapshot of the economic performance of South Africa under its various presidents (including the last few quarters under president FW De Klerk who was the last president of South Africa before a new president was democratically elected. We would like to show growth during the transition from Apartheid). Each president's economic performance will be individually discussed below.
Following is a graph showing South Africa's annual GDP per capita (Rand value of the South African Economy per person living in it, as calculated by South African Market Insights). As can be seen from the graph during Thabo Mbeki's tenure South Africans enjoyed a surge in GDP per capita, while more recently the GDP per capita has remained relatively flat (hardly any growth from 2010 to 2015). This is partly due to low/no economic growth, while the population steadily kept increasing (thus more people sharing the spoils of the South African economy). If the population growth keeps outstripping the economic growth the country will grow poorer per person. PWM
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While the graphs above give a good indication of South Africa's economic performance since the rise of democracy, another indicator of a country's economic performance is a country's exchange rate. In particular its exchange rate to the most traded currency in the world - the USA dollar. The following sections will take a look at the economic growth rates, social development, interest rates, etc. per president of the republic.
May 1994-June 1999: President Nelson Mandela During President Mandela's reign as leader of the country South Africa experienced massive Foreign Direct Investment (FDI), as the country had sanctions lifted against it and foreigners and foreign businesses could invest in South Africa again. Strong FDI usually leads to a strong currency as the demand for the
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domestic currency increases. It also drives construction and infrastructure development (which bears fruit in later years as this lifts the capacity of an economy to handle greater growth, in terms of population and trade, The fruits of this can be seen in the strong growth experienced during Thabo Mbeki's tenure as president). Increased foreign trade was experienced too as sanctions were lifted. During President Mandela's presidency the South African economy grew on average by 2.5% (quarter on quarter annualised data) and inflation averaged 8% per year.
14 June 1999 to 24 September 2008: President Thabo Mbeki During President Thabo Mbeki's tenure as leader of South Africa, South Africa experienced an average GDP growth rate of 3.25% (quarter on quarter annualised) and inflation averaged 5.6%. Page 9
The combination of president Mbeki and finance minister Manual proved to be the most successful economic combination in South Africa's young history. South Africa experienced 36 consecutive quarters of positive economic growth during the period in which Thabo Mbeki was president and Trevor Manual was finance minister. It has to be said they were in charge of the country and finances during a "sweet spot" for South Africa. Demand for commodities were surging (largely driven by China), prices for commodities were surging ahead, all leading to South African companies making massive profits from the exports of commodities. Some economists have lamented the fact that SA did not grow at higher rates during this time, focussed more on improve the levels of education, and invested more into infrastructure and other less volatile and vulnerable industries, to ensure future job creation and a lesser dependence on volatile commodity markets and prices. Thabo Mbeki was recalled by the ANC before his term was over, and a caretaker president was appointed until the next general elections were held. The caretaker president was Kgalema Motlanthe.
24 September 2008 to 9 May 2009: President Kgalema Motlanthe During President Kgalema Motlanthe's tenure as leader of South Africa, South Africa experienced an average GDP growth rate of -2.2% (quarter on quarter annualised) and inflation averaged 9.9%. Sadly he presided over the country during the global financial crisis set on by the subprime mortgage crisis in the USA and never had much influence over policy or the implementation thereof. and to a large extent economic policy set out by South Africa, could not prevent this slump in growth during the financial crises as the whole world was affected by this, and South Africa is an extremely open economy (i.e a large part of its economy comes from trade with and from the rest of the world). It has to be said that South Africa's financial system coped extremely well during the financial crisis. This is largely due to the fact that South African banks and consumers did not have large scale exposure to subprime mortgages in the USA. Strict financial controls on SA citizens and companies investing and taking money offshore shield our banks and citizens from large exposure to the subprime mortgage market.
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9 May 2009 to 14 February 2018: President Jacob Zuma Under Jacob Zuma's rule, South Africa experienced an average GDP growth rate of 2.1% (quarter on quarter annualised) and inflation averaged 5.23%. This during a period in which commodity prices dropped off a cliff, then rose to new heights and dropped back down to multi year lows. Unfortunately SA did not diversify enough away from commodities during the good times, and its economy is still very much linked to the fortunes of resources and commodities. Sadly the recent drops in commodity prices are used as an excuse for poor economic growth, yet we never experienced massive economic growth when commodity prices were sky high. Can't have your bread buttered on both sides, so if we were to blame commodity prices for poor economic performance, the question has to be asked why did we not perform better with high commodity prices? At the end of the Zuma era presidency he was involved in numerous scandals, including being implicated in State Capture in which the Gupta family (in particular Atul and Ajay Gupta) held massive influence over Zuma and even had a say in cabinet appointments in key positions, all in an effort by the Guptas to ensure it gets favourable contracts from State Owned Enterprises (SOES), such as Denel, Prasa, ESKOM etc. The Guptas are accused of laundering billions of Rands from state coffers, and all thanks to their influence over Jacob Zuma and his son Duduzane Zuma. Luckily for South Africans the ANC finally woke up and recalled him, after which Zuma resigned. If Jacob Zuma did not resign, a motion of no confidence in parliament would have removed him, as the country and all of its politicians grew weary of Zuma and his companions.
15 February 2018 to current: President Cyril Ramaphosa Former deputy president of South Africa, Cyril Ramaphosa was formally sworn in as South Africa's 5th president since the dawn of democracy. He is seen as more pro business and less populist than Zuma, and as a consequence the currency market responded very favourably to the news of him becoming the president of the ANC in December 2017 and ultimately the president of South Africa in middle February 2018. President Ramaphosa's reign as South Africa's president has not gotten off to a great start, with the first set of economic growth rate figures under his watch coming in at -2.2% in the first quarter of 2018.
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Deon Gouws, CIO
The Folly Of Market Timing As one reflects on Credo’s growth as a business over the past 20 years, it seems appropriate to bear in mind that all of this has been playing out against the backdrop of financial markets which have been particularly strong over the same two decades (even allowing for a couple of major crashes, several other hiccups and a number of scares along the way). Accordingly, whilst Credo celebrates this landmark, practically every financial market in the world finds itself at a rather elevated level; at the time of writing (i.e. early March 2018), the S&P500, for example, is trading within 5% of its all-time high reached just a few weeks before. So, what should an investor’s allocation to risk assets be in a high conviction portfolio, given that “everyone” seems to agree about markets being expensive and that a sizeable drawdown may be around the corner? To be sure, large parts of the financial
press has been awash with some very bearish pronouncements by global asset allocation experts for some time now. When global equity indices declined by some 10% towards the end of January 2018, many of these people were yelling “Told you so!” and “This is the beginning of the end!”; when markets started to recover slowly but surely a few days later, most of them were quieter, for obvious reasons… Whilst I would never claim to know any better than this army of acclaimed investment strategists, my personal answer to the asset allocation question tends to be pretty consistent over time: I believe it is always advisable to take as much risk as makes sense in your own individual circumstances. For myself, that means a full allocation to equities; for others, it may be a variety of other risk assets, based on their individual background, circumstances, knowledge and experience, e.g. commercial property, farmland or direct business interests.
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Even though it seems fashionable to describe yourself as a bearish investor these days (judging by how many respected market participants have joined those ranks), I take inspiration for my more sanguine view from a number of other investors in history. Peter Lynch, for example, had this to say after his retirement from a very successful career as manager of the Fidelity Magellan Fund more than two decades ago: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” What does a “full allocation” to risk assets mean? The response won’t be the same for everyone, and it will depend on one’s risk profile as well as investment horizon. There are many people who are able to afford a fair amount of risk (i.e. they may be relatively Page 12
well-off, in good health, not have too many dependents, lead a modest lifestyle, etc.), but their personality traits could be such that they simply have a very low tolerance for risk. In other cases, the exact opposite may be true: some people are active risk seekers (think of those in your network who enjoy a bit of sports betting), but they may in fact have a fairly low risk capacity (as they may simply not be able to afford any substantial losses, given their needs). There is nothing inherently wrong with falling into either of these camps: every one of us is different. These two sets of clients would however need to be classified as lower risk investors, given that both the capacity for risk as well as the attitude to risk (viewed independently) serve as constraints as far as a client’s risk profile is concerned. No full allocation to risk assets in this instance, therefore… As far as time perspective is concerned, it is common cause that investors are best placed if they are willing and able to take a long-term view: this allows for the mathematics of compounding to work its magic, and it also helps smooth out the impact of short-term market fluctuations.
The problem is that everyone has a different view of what the long-term entails: some think that it’s five years, others might say ten… however neither of these really boil down to the long term, in my view. To illustrate: it has been a full decade since the start of the infamous global financial crisis of 2007/2008, and we have not even had a full economic or market cycle since then. For the vast majority of the period, we have seen interest rates in developed markets at or near zero, for example. Having turned fifty only a few years ago and being in relatively good health (at least as far as I know today, thankfully), I personally view the long term as a minimum of twenty years or more. I am fortunate that I have a job which I enjoy, and I hope to be able to earn an income from it for many years to come. Add to this the fact that I have trained myself to be a “glass half full” person, and all of this adds up to having practically all of my and my family’s nest egg in the form of equities – even though I fully realise that the market is not cheap.
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I am prepared to stomach the drawdowns when they come, given that the actual timing of the next possible market correction is essentially unforecastable (not even those renowned global asset allocation experts can foresee this kind of event with any consistency, much as I admire some of them). In fact, I don’t even see a possible correction as the biggest risk to the ultimate financial well-being of an investor: what one should be much more worried about in my view, is your own behaviour when eventually it happens (as no doubt it will, sooner or later). Will you blink at the bottom, sell out of equities and lock in your losses for evermore? And before you say no, bear in mind that it’s simply natural to experience the same fear as those around you when there’s “blood in the streets”… I will go one step further: say you are lucky enough to get your timing right, and you raise a substantial portion of cash just before the market actually crashes: do you really believe you will have the wherewithal to put most of that money at work later on, when everyone else appears to be a seller?
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Assuming you’ve been a market participant for a while, you may find a clue to answering this last question in how you felt and behaved in the first quarter of 2009 (i.e. when markets eventually bottomed out and traded at multi-decades lows in the wake of the global financial crisis). Were you actively topping up and piling into equities at basement bargain prices? You may be the exception, but most investors were not high conviction buyers at the time: the very reason why market bottoms are formed, is that the vast majority of market participants end up being bearish at the same time. The best defence that an investor has against the vagaries of financial markets, is to acquire a basket of quality assets (that he or she understands), taking care not to overpay for them, and holding on for the longer term.
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The specific basket will of course differ based on preference and risk profile, but it is the principle that matters. And don’t lose too much sleep over the fact that you will get some individual exposures wrong: as long as you make diversification your friend, it should not matter that much in the end. More than anything, don’t get too perturbed by the forecasts of all those experts. As the same Peter Lynch referred to earlier once said: “I can’t recall ever once having seen the name of a market timer on Forbes’ annual list of the richest people in the world. If it were truly possible to predict corrections, you’d think somebody would have made billions by doing it.”
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THINGS WORK OUT BEST FOR THOSE WHO MAKE THE BEST OF HOW THINGS WORK OUT. JOHN WOODEN
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M A R K E T
C O M M E N T A R Y
P
*Adapted
Source: Brooks MacDonald
President Trump continues to challenge the geopolitical status quo The risks associated with trade protectionism increased in the second quarter amid escalating rhetoric between the US and its major trading partners, most notably China. Business activity surveys show that the threat of tariffs has already had an adverse effect on confidence globally, even if any direct economic impact is yet to be felt. More generally, there seems to be growing disharmony between the US and the rest of the world, with Trump also taking divisive positions on issues such as immigration and the Iran nuclear agreement as he pushes his ‘America First’ agenda. However, there was positive news regarding North Korea, with Pyongyang reaffirming its commitment to denuclearise the Korean peninsula after President Trump met Kim Jong-un in June.
Meanwhile, the US economy continues to outperform Economic momentum swung further towards the US over the quarter, with the government’s tax reforms expected to provide an additional boost towards the end of the year.
US inflation also moved to the Federal Reserve’s (Fed) target level and is expected to accelerate in the coming months. In response, the US central bank raised interest rates to 2% in June, while it continues to withdraw liquidity by reducing the size of its balance sheet. Furthermore, the Federal Open Market Committee’s (FOMC) projections of the pace of future rate hikes increased from one more 0.25% hike this year to two.
Political headwinds have persisted in Europe, as we expected In Europe, the focus was on political events in Italy, where a populist coalition government was formed, and Spain, where the incumbent Prime Minister was ousted after a vote of no confidence. Meanwhile, the European Central Bank (ECB) committed to ending its asset purchases by the end of the year as the inflationary backdrop has firmed. However, it also provided a dovish surprise by promising to keep interest rates on hold at least through the summer of 2019, given a moderation in the rate of the region’s economic expansion. The Bank of Japan (BoJ) also maintained its commitment to extremely accommodative monetary policy as Japan’s economy ended its longest period of consecutive quarterly expansion since the 1980s.
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M A R K E T
P
C O M M E N T A R Y *Adapted
Source: Brooks MacDonald
Tighter liquidity is already affecting the emerging markets
The developed world has remained more resilient
Together with the shift in relative growth momentum, the increased threat of protectionism and political events caused the dollar to appreciate sharply. This exacerbated the tightening of global financial conditions that is occurring around the world as yields rise and central banks withdraw liquidity. In turn, emerging market assets suffered declines; this was particularly evident in countries such as Turkey and Argentina, whose currencies experienced sharp devaluations.
Developed-world returns were generally more favourable. UK equities led the market, supported by positive news regarding Brexit, the Bank of England (BoE) committing to keep policy accommodative, and sterling weakness. Gilts also achieved positive returns, benefiting from BoE’s policy stance and risk aversion in Europe, although European sovereigns lost ground, mainly because of the political developments in Italy and Spain. US equities generated solid returns as the underlying corporate earnings backdrop remains robust, while treasuries also ended the period with positive returns, despite the benchmark tenyear treasury yield temporarily breaching the key psychological ‘break-out’ level of 3%.
Developed-world returns were generally more favourable. UK equities led the market, supported by positive news regarding Brexit, the Bank of England (BoE) committing to keep policy accommodative, and sterling weakness. Gilts also achieved positive returns, benefiting from BoE’s policy stance and risk aversion in Europe, although European sovereigns lost ground, mainly because of the political developments in Italy and Spain. US equities generated solid returns as the underlying corporate earnings backdrop remains robust, while treasuries also ended the period with positive returns, despite the benchmark tenyear treasury yield temporarily breaching the key psychological ‘break-out’ level of 3%.
The fluid geopolitical backdrop supports the case for active portfolio management Elsewhere, oil prices continued to move higher due to concerns over the effect of geopolitical developments on supply. This helped the energy sector outperform and boosted markets with large exposure to it, such as the UK. Elsewhere, financials lagged as yield curves flattened, but stocks linked to our technology and healthcare themes did well.
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TIME OFF A TRAVEL AND LEISURE INSERT
FUN FACTS: CAPE TOWN Today, the city’s renowned Robben Island is most famous for it’s political prisoners, but it was not only used as a prison. During the 1840’s, the island was chosen as a place to house leprosy patients along with the mentally and chronically ill. The first-ever heart transplant conducted by Dr Christiaan Barnard at Groote Schuur Hospital in 1967 was groundbreaking on a global scale. What most people don’t know is that sadly, the patient passed away shortly after. Louis Washkansky contracted pneumonia and lived for only 18 days after the surgery. Cape Town was the first city outside of Europe to receive Blue Flag status due to its high-quality water, fantastic facilities, safety and cleanliness of its beaches. By the early 1900’s Adderley street had become so busy that city planners paved it with wood in an attempt to drown out the noise from countless wagons, carts and horse hooves. Cape Town has always been the ‘Cape of Storms’, but this reached a pinnacle in 1858 when a vicious storm hit and 30 ships were blown ashore and wrecked. The insurance company, Lloyd’s of London, then refused all further insurance on ships in Table Bay during winter, which resulted in the British Colonial Government starting construction on the first breakwater in 1860. Today the breakwater forms part of the Victoria and Alfred Waterfront.
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Korean Pork Ribs RECIPE FROM FINEDININGLOVERS.COM PREPARATION AND COOKING TIME: 6 HOURS & 50 MINUTES INGREDIENTS
SERVES: 4
METHOD
2 kg Pork ribs, cut ready for cooking
Place the pork ribs in one layer in a flat
2 cloves Garlic, finely chopped
dish.
100 ml Soy Sauce 4 tbsp Honey
Mix together the garlic, soy sauce, honey,
2 tbsp Hoisin Sauce
hoisin, vinegar and rice wine.
2 tbsp Rice Vinegar 2 tbsp Rice Wine
Pour over the ribs, coating well.
2 tbsp Sesame Seeds Cover and chill for at least 6 hours. Heat the oven to 180°C (160°C in a fan oven), gas 4. Transfer the ribs and marinade to an oven-proof dish and bake in the oven for around 40 minutes. Brush with the marinade from time to time. Take out of the oven and serve your Korean pork ribs sprinkled with sesame seeds.
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CONNECT MAGAZINE PWM was established in South Africa in 2004 as a licensed Financial Services Provider. We are part of an international group of companies which offers investment, offshore company and trust administration services. Our professional, experienced advisors all have the requisite financial and regulatory qualifications and are supported by a dedicated administration team, ensuring a high level of customised service to our valued clients. Please see below, details of our advisory team. DURBAN Suite 3D Royal Palm 6 Palm Boulevard Umhlanga New Town Centre 4320
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