A LETTER FROM THE CHAIRMAN'S DESK

Dear Readers,

A warm welcome to the Q3 October 2024 edition of Optimum, in which the Orion Investment Managers team share their expert insights into international and local financial markets, as well as the fixed income space. Optimum is also the ‘shopfront’ for our range of asset managers to demonstrate the performance of their respective funds.

In this regard, I am pleased to say that we have added a further asset manager in the Capita and Investin spaces respectively about which our Managing Director and CIO, Adrian Meager, will discuss later. 

Adrian has just returned from a week in the UK and Channel Islands meeting with our international fund advisers and no doubt he will discuss the positive outcomes in the next edition of Optimum.

As I write, two important events for the local and international markets await. On Wednesday 30 October, the SA Minister of Finance, Enoch Godongwana, is due to deliver the Medium-Term Budget Policy Statement, the first under the Government of National Unity. I am pleased to say that our country’s fundamentals and sentiment are better than they have been in recent years, which should provide the Minister with the confidence to deliver a more expansive and stimulatory MTBPS, in contrast with the previous dire warnings of South Africa’s pedestrian economic growth, national debt and fiscal cliff. 

Though stickier than many had expected, local inflation is now heading markedly downward, with the latest read at 3,8%, its lowest since March 2021. This allows the Reserve Bank more headroom to reduce interest rates further, which in itself will be a fillip to consumers, borrowers and investors. Note, however, that the hawkish Governor of the Reserve Bank may be seeking a lower inflation target and band than the current 4,5 percent midpoint. 

Not only has the formation of the GNU provided a boost to local and international investors, the run of over 200 days without a power cut not only enhances sentiment, but it also has a real and positive material impact across the entire economy from mining and agriculture to retail, manufacturing and the property sector. The strengthening of the Rand against the dollar, while in part driven by the relative weakness in the latter, is a further signal of confidence and one that if sustained could have positive consequences for the local economy and consumers.

While it is far too soon to tell when the outcome will be announced, all available information suggests that South Africa is making good progress in meeting the requirements of the Financial Action Task Force to have the country uplifted from the Grey List. This may only be announced in the course of 2025, but when it happens, it will help restore confidence and credibility to our entire financial system and make life easier for all regulated and compliant financial institutions dealing with international transactions.

On the international front, besides the ongoing geopolitical uncertainty in the Ukraine Russia war and the heightened conflict in the Middle East, November 5 will see a new President elect emerge in the United States. While the respective candidates could hardly be more different in their political ideologies and social policies, the critical issue for global and local markets is the economic policies that either a Trump or Harris administration will deliver once inaugurated in January 2025. 

Rest assured that the OIM team will be monitoring and assessing all these issues very carefully and will be configuring our investment strategies appropriately.

Until next time, remember the old adage, “time in the market is far more important than timing the market”!

Sincerely,