Given the volatility of South Africa’s currency, its political situation and its economy, local investors would do well to establish portfolios that preserve their capital for the long term, that incorporates offshore investments as a rand hedge.
“High-net-worth South Africans who remain in the country may benefit from having a financial presence elsewhere,” says Tom Elliott, international investment strategist at the deVere Group.
“It’s no secret that the local economy is currently in the doldrums – if not a true recession – and that political and economic uncertainty continues to hinder growth.”
One of the key issues facing the South African economy is the uncertainty about the way forward for Eskom. Finance Minister Tito Mboweni has to present some sort of resolution to the challenges faced by the embattled utility in his mid-term budget, due end-October, and the outcome seems far from clear.
“Eskom underpins the economy – as can be seen by the stark difference between the GDP in Q1, when there was loadshedding, and Q2 when there was none. Uncertainty around power supply is not only holding back existing commercial activity, but preventing investment in future growth by local and international business, causing long-term harm as well.”