WINDHOEK - Last week Stanlib hosted their annual Asset Management Roadshow and presented invited guests and members of the media with various views and insights covering the political, economic and investment landscapes in Namibia and neighbour South Africa.
Taimi Shejavali, Managing Director Stanlib Namibia, welcomed guests to the two breakfast sessions in Windhoek and at the coast and said that based on discussions with many financial advisors and brokers, it came to the fore that some of the biggest challenges currently faced by advisors and brokers are managing the low returns on client investments and the requirement to generate positive real returns whilst avoiding an erosion of capital.
“As an industry and a business, we have seen a significant shift of new investments as well as existing assets into cash and low-risk fixed interest assets and funds. While we know that in the current market cycle it has reflected well in terms of clients’ returns compared to traditional balanced funds, we all agree that clients have to be invested in growth assets over the long term to meet their long-term savings requirements,” she said.
Speakers at the event included Melanie Verwoerd, a freelance writer and political analyst; Rowland Brown of Cirrus Capital and Sylvester Kobo, portfolio manager of the Standard Bank Namibia Income Fund.
Verwoerd gave her views and insight on the political landscape of South Africa, especially in light of the upcoming May elections in that country. She is of the opinion that the ANC will win the elections, although margin predictions are very difficult, and that Cyril Ramaphosa will remain president.
“When Ramaphosa and the ANC remain in power, I believe that he might cut back on the public sector wage bill, sort out Eskom very quickly with unbundling, reduce the cabinet and keep fighting corruption – all great indicators for a better South Africa. I also believe that expropriation of land without compensation will not happen. I am confident about the future with President Ramaphosa at the helm, as he is anti-corruption, has a totally different energy and understands markets, economy and business,” she said
Brown, in his address, gave a short economic update covering the US, Europe and China and policy uncertainties within these key economies, and then focused on the Namibian situation, which he said remained concerning. “Over the past two years the economy has not expanded and we have very low growth and real stagnation, especially with regards to unemployment. One in three willing and able-bodied Namibians are unemployed and one in two youngsters do not have work and to me this is a crisis.”
Brown added that the Namibian government was in an extremely difficult situation as the income forecast was far below than what they thought.
Government debt has ballooned from N$16 billion in 2010 and is forecast to will be N$100 billion in 2020.
“We are spending more than what we are earning, and this is very unhealthy and not sustainable,” he observed.
Further, several considerations have also raised red flags with potential investors – both local and international – and make them think twice about investing in Namibia. These include Neef, Nipa, tax changes, expropriation, rent control, rising populism and socialism with a Namibian flavour. “While we actually forecast a very low growth this year – around 1.2 percent – we also forecast that growth will drop to half a percent by 2020 again.”
As last speaker Sylvester Kobo highlighted the key points which could impact the fixed interest market and linked these points back to the Stanlib outlook for fixed interest this year and specifically the Standard Bank Namibia Income Fund. “We have consistently positioned our fixed interest business and more specifically our SBN Income Fund as a possible solution to consider for inclusion in our clients’ investment portfolios, as firstly a good alternative to cash as well as a diversifier to reduce the risk within our clients’ portfolios.” He showed how the past performance of the SBN Income Funds is at approximately 9.4% (on par with the MSCI Emerging Equities) at a significantly lower risk level.