Quarterly Publication - July 2016
NOTES FROM MY INBOX - July 2016
It has been an explosive couple of weeks, with Brexit rocking the markets to their core. The UK’s decision to leave the EU has injected even more volatility into an already uncertain environment.
We expect the markets to remain unsettled for some time. As always, our focus is on the long term and on identifying investments that are trading at a discount to their long-term business value. The market mania is creating more of these opportunities, which should over time deliver long-term outperformance. We certainly do not believe investors will achieve compelling returns by slavishly following erratic market indices.
At Coronation, we are very careful about not creating specialist silos where investment decisions are made in a vacuum.
Our entire investment team of more than 60 individuals – covering the South African, Global Emerging, Global Developed and Frontier Market strategies – sit together in an open-plan office. They are constantly interacting and exchanging investment information.
Also, our analysts and fund managers are each allocated a wide range of research responsibilities, across different industries and countries. This emphasis on a generalist investment perspective and skill set, rather than a specialist one, is one of our defining advantages. Our investment professionals can price profit and risk across asset classes, sectors and geographies, and should be able to give a well-considered view on the merits of an investment in a bond against any equity that they may analyse.
We believe this broader perspective builds better investors, drives better debate and results in better investment decisions. It has also been invaluable in helping us to deliver excellent long-term outcomes in our multi-asset funds.
Our team-based and generalist approach has contributed to the stability of our investment process. With analysts covering a wide range of companies in different sectors, there are no gaps in research coverage in the event of departures from the team. We find this provides an important source of comfort to our clients.
In this edition
This issue of Corospondent offers extensive analysis of how the recent political events have impacted the markets. Our economist Marie Antelme explains the larger implications of Brexit, while Neville Chester notes our investment response to the event. You will find more on the immediate repercussions in our various market commentaries, including the SA market review, the international market review and the bond outlook.
Pallavi Ambekar details our investment case for MTN, which is showing signs of recovery after a tough period, while Iakovos Mekios gives our assessment of the Mexican investment landscape following a recent visit. Also in this edition, Greg Longe discusses the prospects of Nigeria, which is suffering from chronic balance of payment problems, and Steven Barber examines the long-term prospects of a global pharmacy giant.
We hope you enjoy the read.