Kirshni Totaram is Global Head of Institutional Business.

Welcome to our July edition of corospondent. The uncertainty felt in the markets through the first half of the year still lingers, but this mid-year break brings the perfect chance for me to reflect on what is truly important for our clients right now.

We know it’s tough out there. There are high levels of fatigue. Concern about economies and markets continues, and confidence remains depressed. With growth in South Africa being anaemic and the global geopolitical environment in turmoil, a calm sense of clarity is needed to navigate these tough times.


The elections are now behind us. Infighting within the ANC has continued and although disappointing, it is not totally unexpected. Critically, however, is that it serves as a distraction from the work needed on policy reform, most importantly addressing the sustained decline of state-owned enterprises.

In his State of the Nation address in June, President Ramaphosa disappointingly gave little detail on how they would be managed. He did signal that Eskom will receive additional financial support from government, thus increasing the debt on our country’s already strained balance sheet.

The ugly reality of South Africa’s growth was plain to see with Statistics South Africa’s quarterly numbers reporting a decline of 3.2% – the largest quarterly decline in 10 years. In her review of the South African economy , Coronation economist Marie Antelme points out that the economy is unlikely to grow by more than 1% in real terms in 2019. She looks into the very weak growth and the effects on South Africa’s long-term ability to manage the structural challenges it faces. On a more positive note though, looking ahead, a modest, cyclical improvement in growth is expected.


The US-China trade war shows no signs of abating, despite some encouraging steps and comments from US President Donald Trump and China’s President Xi Jinping at the G20 Summit in Osaka. Internationally renowned economist Professor Barry Eichengreen unpacks the current status of the trade war , which has moved beyond trade tariffs and become a battle for geopolitical supremacy revolving around technology. The reality is that it doesn’t bode well for US-China trade relations, for the global trading system or macroeconomy, and he explains why mainstream analysis fails to account for the investment and supply chain impact of the tensions.


The global media landscape is shifting dramatically, given changes in consumer viewing habits enabled by new technology and new players. How audiences consume content has changed fundamentally, and producers are in a fierce battle for viewership. The diversity of channels has made it harder for producers to monetise content. But for various reasons, as global developed markets analyst John Parathyras points out in his article , one valuable exception is sports content. Formula 1 is listed, making it the only truly global sporting franchise that provides investors with access to a top sporting event.

The rules are also changing for luxury brands as a whole in this increasingly digital world. Many are struggling to keep apace, while others are thriving in this new paradigm. Equity analyst Lisa Haakman takes us into the world in which customer relationships with luxury goods  are deeply emotive and personal, highlighting which brands we believe are partic­ularly attractive.


There are certainly gems like these to be found globally where we are seeing value. But in keeping with looking at things in the cold light of day, in this edition we also consider that many South African companies have expanded offshore, straying away from core competencies, but few have truly succeeded abroad. The deteriorating economic conditions have eroded seemingly sound investment cases. In his article Portfolio manager Quinton Ivan unpacks why the grass isn’t always greener offshore and uses the unfortunate acquisition experiences of Woolworths and Sasol as examples.


In closing, what is most clear to me is that when times are tough and the world around you is scrambling for a piece of the pie, having a strong culture in your organisation is one of the most powerful stabilisers, and indeed a competitive advantage. Culture is a great anchor, building internal strength and cohesion. At Coronation, our unique culture and value system glue us together. It is not just a quote on our website, but what happens on the ground. We live it every single day, giving us purpose and clarity. Looking forward, the clarity that comes from our long-term investment philosophy, a client-centric culture and the cohesion among our highly skilled team of people is of great benefit in managing our clients’ money to best advantage.

We wish you well as we enter this second half of 2019 and thank you for your valued trust and support.

Enjoy the read.


Kirshni Totaram is Global Head of Institutional Business.

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