The front page of the Financial Times featured an article about SA supplying Russia with weapons (see photo). Shortly after this accusation was made in a media statement by the American ambassador to South Africa, the rand shot through the R19/$ level and the price of locally focused shares dropped by around 5%. Even if the allegation is not true, it is clear that the US is not happy with South Africa. And making an enemy of the USA is a very bad idea. We all know that the ANC government has already sided with China in this conflict between East and West, but although China was our biggest single export destination in 2022, the rest of the developed world together still dominates this space.
1. China: US$11.9 billion (9.7% of total South African exports)
2. United States: $10.9 billion (8.8%)
3. Germany: $10.1 billion (8.1%)
4. Japan: $8.6 billion (7%)
5. United Kingdom: $6.3 billion (5.1%)
At JWR we have to focus on where to invest our clients’ money and on assisting them in their overall financial planning strategy. We cannot become fixated on the day-to-day political shenanigans, but unfortunately, owing to the demographic of our voter base, a dysfunctional government is making things very hard for all of us. This is not a uniquely SA phenomenon. There are many other countries where sound, logical governing principles are not implemented for the benefit of the population, so we just have to work around the problem.
As investors and citizens, there are at least three things we can focus on:
1. In the 2024 election, use your vote to the best of your ability. You get what you vote for.
2. Support your local community and become a ”do it yourself” person.
3. Diversify your investments worldwide.
It might not be the best time to buy dollars now, but for most of our clients, the current situation is softened by their investments in hard currencies. Just on the currency side, investments in US$ gained 11.5% year to date; investments in pounds gained 16.6%; and investments in Euros gained 14.8%.
