Finweek - Afrikaans 31 December 2015

it may not feel like this at the moment, but we don’t hold the monopoly on bad news. For one, we’re not the only country where a substantial chunk of the population – or then at least the Twitterverse – is frustrated with their president. Brazilians have been trying for months to get their president Dilma Rousseff impeached, with thousands (estimates vary from 90 000 to 407 000) demanding her removal during protests on 14 December 2015. Facing corruption allegations and overseeing a floundering economy, Rousseff will likely not lose too much sleep over the latest protests, which have been losing steam. In March 2015, for example, an estimated 2.4m anti-Rousseff protestors took the streets. (Also see page 34.) While Rousseff seems to be sitting pretty, Brazil’s economy shrunk by…

the 2015 #Fall movement was inspired by, of all things, a pile of excrement. Incensed by having to walk past the Cecil John Rhodes statue on his way to lectures every day, University of Cape Town student Chumani Maxeke threw faeces at the colonialist’s effigy. From that simple act of vandalism grew a powerful force that would define 2015. Fellow UCT students joined Maxeke and the #RhodesMustFall campaign was born. The UCT administration was eventually forced to pull down the statue and re-examine the values and culture of the institution. Other statues of colonial and apartheid icons were also attacked around the country as part of a student-led campaign of “decolonising” SA. To some this campaign of attacking concrete representations of dead white men seemed rather absurd and pointless. But…

look into the crystal ball of 2016, and there is much to be worried about. The global economy is stumbling along. The conflict in Syria has created geopolitical shifts: the refugee crisis and the political repercussions in Europe; the rise of ISIS and fear of terrorism; the intolerance of Donald Trump and his supporters. Closer to home, the volatility of the rand is partly a consequence of the internal power struggle within the ruling party: the removal of finance minister Nhlanhla Nene on 9 December 2015 followed by Pravin Gordhan replacing Nene’s successor four days later was a case in point. The medium-term effects of this strange episode in our political history are still unclear, but it is likely to have reminded SA’s politicians, and those who vote for them,…

looking into the future and making predictions is fraught with difficulties. The only real upside is that if you don’t make that much of a mess of it, nobody will remember. For me the key thing is to focus on recency bias, the bias that makes us think that whatever has been happening in recent times will continue to happen. This is a double-edged sword. Firstly, if everything just carried on as usual, life would be simple. But the reality is that while things do change, that change often occurs at a far slower rate than anyone expects. So we need to know when to embrace recency bias and when to be bold and ignore it. Three key features of the 2015 investment world was the collective holding of breath…

“There’s lots of frustration about what happened, and questions begin to be raised about whether the political leadership of the country understands the complex nature of South Africa’s political economy and its place in the global economy.” − Tito Mboweni, former Reserve Bank governor and member of the ANC’s National Executive Committee, in an interview with the Financial Times about President Zuma’s axing of former finance minister Nhlanhla Nene. “The reappointment of Gordhan does not remove all the uncertainty over government effectiveness and the coherence and credibility of economic policy generated during a turbulent week.” − Ratings agency Fitch comments on the appointment of Pravin Gordhan in December 2015, SA’s third finance minister in five days. It said February 2016’s Budget will be an important event in assessing the government’s…

I was having year-end drinks on 9 December with a bunch of friends when I got the message that President Jacob Zuma had fired finance minister Nhlanhla Nene and replaced him with an absolute unknown. My immediate response was twofold: firstly, that – as absurd as it sounded – it was likely true. Secondly, the president had just thrown the country off the cliff. So how does this play out, and what do we do with our investment portfolios? The reality is that even with a tough finance minister pushing back on spending, there was a small but real chance South Africa’s credit rating would be downgraded to junk status during 2016. With former finance minister Pravin Gordhan back at the helm at Treasury, junk status is therefore still possible…