10 MARCH 2017
NAMIB TIMES
15
Monthly Monitor: February 2017 Market Review: diversified investment portfolio that is suitable for you, you should be Our current investment world is diverse, influenced by a bullish United States of OK. Are you sticking to your long-term investment plan? America (USA), uncertain South Africa (SA) and a mixed 'rest of the world'. Hendrie Scheun, MSc (Financial Economics) (London), ACFP The USA takes the lead. Its dominance is well established and all eyes are on the “Trump” share rally breaking record after new record. This strong increase in listed company prices is based on his policy intentions of massive infrastructure spending, significant lowering of corporate taxes and removal & consolidation of regulations. These measures will lower company costs or boost profits, thereby raising earnings and share prices. The USA, with some uncertainty about how President Trump will deliver on his policy objectives, is thus in a strong bull market phase. This is very positive for global shares. However, the Federal Reserve Bank has started raising short-term interest rates in December 2016 and will continue to do so in small increments. This is proof of a healthy USA economy, which may have some wage pressures building up from excess labour demand. The first few interest rate hikes are usually positive for shares but will hurt bond prices. South Africa is at an uncertain crossroad. Economic growth is picking up slightly in 2017 and improving in 2018, while inflation is slowing from its recent high of 6.8%. Short-term interest rates may have peaked. Government, however, is plagued by high budget deficits, rising debt and debt servicing levels. Minister Gordhan delivered a Budget that will probably keep international rating agencies from derating SA this year. Politically his position as Minister of Finance is under tremendous pressure. It will be a big negative for SA if he is removed or reshuffled. Table 1 below shows asset class returns over various periods:
Given the above backdrop, asset markets continue to be noisy over the short-term. Local shares had a negative February as a few large companies weakened on a resources sell off. However, many shares advanced in prices. This means the market breath is improving. Local listed property and local bonds continue to perform, supported by the appreciating SA Rand. Local shares are showing much promise over the medium term. The low 3-year return for shares is a big positive as it is less than half of the historical long-term average. Reversion to long-term averages, called “reversion to the mean”, works in both directions: · When we were doing very well in 2012 – 2014 we warned our clients that our portfolio performances were unsustainably high and that asset market returns will become more muted as they revert DOWN to the mean. · This happened during 2015 to 2016. · Our portfolio performances were below average for 2015 – 2016. Now the opposite holds: asset market returns will increase as they revert UP to the long-term average. This implies our portfolio performances will improve. Recent discussions between myself and leading asset managers in SA and Namibia confirm our analysis. For selected shares the SA share market is at a cheaper valuation point than in 2016, 2015 or even 2014; and company earnings are coming through. These will be the drivers for the rise in prices.
Portfolio Performance: Although markets can be volatile over shorter periods, like a month, they become more predictable given enough time. Table 2 shows the 1-year, 3-year (per annum) and 5-year (per annum) returns ending February 2017 of our five managed portfolios. The returns are calculated based on gross internal rates of return (IRR's) from actual client data.
(Investments) (UFS) and CFS®, is a qualified economist with wide international and local experience. He is a senior financial adviser at the Namibian coast focusing on savings and investments and can be reached on 081 127 2244.
REZONING NOTICE In terms of the Walvis Bay Town Planning Scheme, notice is hereby given that Stewart Planning intends to apply for permission from the Walvis Bay Municipality to rezone Erf 3127, 73 Sam Nujoma Avenue, Walvis Bay from “Single Residential” to “General Business”. Plans and particulars of the application may be inspected at Town Planning, First Floor, Room 101, Civic Centre, Nangolo Mbumba Drive, Walvis Bay. Further take note that any person that have objections to the proposed rezoning may lodge such objection together with grounds thereof, with the Municipality of Walvis Bay: Town Planning section and the applicant in writing not later than FRIDAY 24 MARCH 2017. MUNICIPALITY: Manager: Town Planning Section Private Bag 5017 Walvis Bay hhitula@walvisbaycc.org.na 064 201 3339
APPLICANT: Stewart Planning P.O. Box 2095 Walvis Bay bruce@sp.com.na 064 280 770
CALL FOR INTERESTED AND AFFECTED PARTIES The 1-year returns have improved and the 5-year returns are at or higher than our expected long-term averages.
Conclusion: Investments are a long-term journey that receive annual hits by short-term spikes/dips and are tested in every cycle by corrections: The horrible 2008 rebounded to the excellent 2009 – 2010, which turned over to the average 2011, which changed to the great 2012 – 2014, which was followed by the bad 2015 – 2016. Yet overall our long-term performances are compelling because they stayed on track throughout all the noises. Contrary to what the textbooks say, we are in fact not rational beings as our human emotions and the overwhelming negative short-term noises do affect our investment decisions. The results of obsessing over short-term performance is panicking moves that lead to lower returns. The answer lies in educating yourself, picking a sound adviser, formulating a good long-term investment plan and sticking to it over the ups and downs. If you are in good hands with a well-
The rezoning of Erf 3127, Walvis Bay from “Single Residential” to “General Business” may not be undertaken without an Environmental Clearance Certificate (ECC) in terms of the Environmental Management Act (Act 7 of 2007) and its Regulations. Stewart Planning has been appointed to complete a Scoping Report and Draft Management Plan (DMP) for the proposed rezoning. Interested and Affected Parties are hereby invited to register and participate in the public consultation process to give input, comments, and opinions about the proposed rezoning. Please submit your comments, in writing, to the Municipality of Walvis Bay: Solid Waste and Environmental Management Section (SWEM) and the applicant not later than FRIDAY 24 MARCH 2017. MUNICIPALITY: Manager: SWEM Private Bag 5017 Walvis Bay duushona@walvisbaycc.org.na 064 214 304
APPLICANT: Stewart Planning P.O. Box 2095 Walvis Bay bruce@sp.com.na 064 280 770