Jeremy Gardiner

Jeremy Gardiner makes the case for investing offshore.

From China’s scramble for resources on the African continent and the loss in value of the dollar to emerging markets, the high gold price, interest rates and inflation, Jeremy Gardiner takes a look at 26 factors that may influence your investments in the new year.

I had a debate with a London-based journalist recently. "Explain to me," he said, "how it is that all we read about is the problems South Africa faces, yet your asset prices have risen remarkably over the past five years?" So how does one explain this conundrum? Are asset prices wrong?

For the optimists, 2006 was yet another triumphant year. Our optimistic prediction at the beginning of the year of a 25% return from South African equities proved still too conservative, as the market delivered yet another massive 40% plus return — despite what was not the most perfect of years. What then can we expect from 2007?

We live in a volatile environment. Currency, stock-market and political volatility are all part and parcel of daily life in South Africa. Unfortunately — and understandably — this volatility contributes to enormous swings in the sentiment of South Africans themselves.

Global (and in particular emerging) markets are currently in the throes of a necessary but painful breather. The relentless pace that saw most markets recover significantly from the lows of March 2003, with South Africa at one point up roughly 200%, was unsustainable, and the necessary correction therefore came as no surprise.

At the beginning of the year we said that we were pro equities — not because we were necessarily bullish, but because the environment at the time of low inflation and low interest rates, fuelling a rampant consumer, was more conducive to equities than bonds or cash.

The first quarter of 2006 has seen the South African market once again setting a blistering pace. Despite the massive 195% that the JSE is up after the lows of March 2003, the market is showing no signs of abating, rising 13% in the first quarter alone. This should not come as a huge surprise.

A month ago, South African investors were exuberant. Both the currency and the stock market, after years of remarkable strength, seemed bullet proof. Suddenly, however, we found both our currency and our stock market being kicked for no apparent reason a week ago.

From Africa, black economic empowerment, commodities and China to Jacob Zuma, exchange controls and volatility, Investec Asset Management director Jeremy Gardiner looks at 26 issues affecting the economic future of South Africa and its residents.