LONG TERM INVESTMENTS SOUTH AFRICA
IFG is aligned with the new legislative environment and has implemented a standard financial planning and investment process to meet all the requirements in terms of the relevant laws. We recognise the need to measure our advice to clients according to a benchmark that sets the standard in the industry. Our benchmark of the "best advice" and offering "superior services" are the cornerstones of this process.
We ensure a high standard of financial planning within the company and provide the means to maintain that standard. Our in-house designed financial planning tools and modules make it possible to deliver a professional financial and investment planning service, backed by our excellent reporting processes. Through our para-legal team we provide financial planners with support on legal technical matters.
WHY IFG AFRICA?
We are a specialist equity team within IFG Africa Financial Investment Group and offer both sector-specific and general equity funds, predominantly within the South African market. We also offer Pan Africa funds to investors seeking exposure to the broader African continent.We invest in companies that are undervalued and demonstrate an ability to create shareholder value over time, and our investment approach gives us the ability to deliver competitive returns through different market style cycles. We do this by combining a fundamental, valuation-based approach with other proven investment factors such as quality and momentum.
While valuation has proven to be a vital ingredient to long-term outperformance, our research shows that the inclusion of other key variables adds a crucial dimension. The combination of valuation and these uncorrelated variables broadly grouped as Quality, Growth and Momentum, provides a more balanced approach to decision making, enhancing our ability to avoid ‘value traps’ and deliver competitive returns though different market cycles.
Entrepreneurship is about passion. Great entrepreneurs are not driven by a simple desire to make money. They are driven by a need to change the world. They may change the world by building a better operating system or a better search engine or a better social network. But whatever it is they are building, great entrepreneurs are driven by passion.
The same is true of IFG Africa.
It is not enough to simply hope to make a buck. The best Venture Capitalists fund companies about which they are truly passionate. Building great companies takes a long time. And it is never a straight path. But a shared desire to create something great "something important" will carry entrepreneurs and IFG Africa alike through the tough times, but more important to grow financial investemnts for our clients.
So, how do the offshore equity investors currently see South Africa?
Growth/momentum institutional investors are the least persuaded by the South African story. This reflects issues in the weak and weakening rand on the 1 hand, plus the weak general economic development functionality projected into a lacklustre corporate earnings outlook on the other. This isn't unique to South Africa.A related slowdown in other growth markets like Turkey is forecast as their central banks start off to improve interest rates. Eventually, this really is probably to lead to an financial slowdown.Money flow oriented/value investors continue to approach South African investments with a deep basic method plus a constructive outlook. Their issues have resulted in their applying a higher discount to their investment thesis and in the end seeking for more affordable valuations to enhance investments.Liquid, well-managed providers with well-understood equity stories are in the best with the add-on list.Amongst particular mining investors and a lot of specialist mining funds, neighborhood mining has become just about ?untouchable? as a result of the labour strife. Must the labour challenges be resolved, the platinum group metals sector may as soon as once more become an appealing investment.Hedge funds, in unique, continue to believe that regional banks are broadly exposed to unsecured lender credit pressures and that these will contaminate loan development and non-performing loan ratios. This, in turn, will contaminate the earnings and return outlook.How do the offshore institutions see our currency?Final year lots of the outflow that pushed the rand weaker was a mixture of speculative interest inside the context of a tapering atmosphere, a reduction of overweight offshore bond positions and active ?overlay hedging? from true cash investors that were long South African equities and bonds.But so far, this year has been somewhat distinct: portfolio flows in both bonds and equities happen to be disappointing. Since the start of your year, there happen to be only four days of constructive inflow into the bond market, totalling R1.five billion (versus bond outflows of almost R7bn).The equity market place has observed net outflow of about R1bn for the year to date and only six good days of inflow. In other words, what we are experiencing may be the impact of a 6.eight % existing account deficit in the absence of portfolio inflows.Clearly the US dollar in a tapering environment along with expectations with regards to the prospective near-term efficiency of growth markets commonly and much more especially concerns over the perpetual labour challenges are all combining to producefragile sentiment. This really is accurate in respect of emerging industry assets usually and for the nation. This suggests the opportunistic inflows that we would have anticipated in the previous are merely not materialising to help the currency,.Eventually, the ?shorts? seem to become continuing to concentrate on countries that retain considerable present account deficits and are overly reliant on portfolio inflows because the primary source of their financing.The ?early adopters? of a far more hawkish monetary policy stance (Brazil, India and Indonesia) have noticed their currencies stabilise in the past six weeks, whereas these viewed as continuing with actual prices which can be also low to attract or perhaps retain capital continue to weaken. South Africa?s price hike final week may have met some, even though not all, of these expectations.As opposed to the central banks of other essential emerging markets, the SA Reserve Bank established an inflation targeting framework in 2000. The framework has been productive in managing inflationary (and deflationary) stress, anchoring inflation expectations and supporting growth within the previous 14 years. Hence, we count on the Reserve Bank to keep its measured strategy to any additional price action and concentrate on the inflation and growth outlook constant with this framework.