JOHANNESBURG – Fund manager Coronation on Tuesday slashed its dividend payout by 9.2 percent to R1.97 for the year ended in September as South Africans cashed in their pensions faster than the company could grow them.

The group said that its assets under management have declined by 4.4 percent from R614 billion to R587bn during the period, while revenue has decreased by 1.8 percent to R3.8bn in the same period.

Chief executive Anton Pillay said the weak domestic economy and pressure on emerging markets resulted in the FTSE/JSE All Share Index producing a mediocre return of 3.3percent for the year. 

“Due to the cyclical nature of the business, our revenue stream is highly geared to the returns of the markets and the level of performance that we generate on behalf of our clients,” Pillay said. “Over the past 12 months these cyclical pressures have been particularly acute.”

South Africa’s stock market has endured a turbulent year as emerging markets buckled on the strength of the dollar and the increase in US interest rates, while a trade war between the US and China also wreaked havoc on global stocks. The all share index, which reached an all-time high of 61684.77points in January this year, yesterday extended its losses.

Izak Odendaal, investment strategist at Old Mutual Multi-Managers, said the JSE had largely lagged other emerging markets.

He said the index was on track for the fourth negative calendar year in the past 20 years. “Naspers is the biggest share on the local market and its value is largely determined by its stake in Tencent. Tencent’s Hong Kong share price is down 30percent over the past year,” Odendaal noted.

“Richemont’s Zurich share price is down 25 percent. MTN faces a huge fine for allegedly contravening Nigerian regulations and its price has plunged 40 percent. “Meanwhile, Aspen’s strategy of growth through acquisitions left it with high debt levels, making investors very uncomfortable.”

Coronation has a more than 2 percent stake in MTN. The fund manager saw its profits for the year decline 3.8 percent to 420.7cents from 437.5c.

Professional services firm PricewaterhouseCoopers (PwC) last week said the R290bn worth of investment pledges from local and international companies announced at the investment summit last month could add R338bn to South Africa’s gross domestic product over the 2019 to 2024 period. 

PwC further estimated 165 000 direct and indirect jobs on average per year, generating an estimated R59bn in additional government revenue.

Pillay said while the economy remained beset with difficulties, Coronation was encouraged by actions taken by the current political leaders.

“We believe they will translate into higher levels of confidence initially, and potentially higher levels of investment into the economy,” he said.

Coronation declined 1.38percent on the JSE yesterday to close at R44.26.