Global Corospondent - October 2019

Corospondent - October 2019

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Kirshni on point - October 2019

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Kirshni Totaram

Kirshni Totaram

Kirshni is Global Head of Institutional Business. She joined Coronation in 2000.

WELCOME to our latest Corospondent!

Not surprisingly, I again started this note with penning thoughts about the uncertain times we currently find ourselves in. And it dawned on me that it’s been this way for some time now. As an individual and as a company, when you have navigated through years of challenging environments in the local and global markets, as well a in our industry, I think it’s important to pause and reflect from time to time.

I find it valuable to look at who we are and what we continue to stand for. At Coronation, we have stayed true to our culture since starting out in 1993 – an anchor which has served us well over the pastquarter of a century. Always remaining singularly focused on our purpose of building long-term wealth for our clients gives us great clarity in what we need to achieve. And, while we acknowledge that uncertain times means that we still have a lot to do, we take pride in what we have achieved over the long term. We have never wavered from our path as custodians of the savings of millions of South Africans. But more than that, we have used our resources and influence to be a leader and change agent in the South African retirement industry. To this end, assisting in the transformation of our country has been deeply important to us. This is why we have played a significant role in transforming the financial services sector to be more inclusive, in uplifting communities through our CSI initiatives and ensuring our own business reflects the demographics of our country.

During Women’s Month in August, we highlighted the value and achievements of women in South Africa by hosting a number of inspiring events. I hosted our annual Women’s Day events for clients and Grade 11 schoolgirls in Johannesburg and Cape Town. Renowned US space engineer Danielle Wood gave an inspirational talk on her life and how she uses space technology to create solutions for communities in need here on earth and to address the UN’s Sustainable Development Goals.

This was particularly meaningful given the increased focus globally on issues of climate change and sustainability. In South Africa, dialogue about these and other environmental, social and governance (ESG) issues has certainly increased. The Financial Sector Conduct Authority released its guidance note in June, requiring pension funds to factor ESG concerns into their investment strategy and monitoring. For us, this means increased time spent understanding, articulating a belief system, and reporting on these matters – something that will become a standard part of the offering of managers around the world.

We also welcomed South African athlete and Olympic gold medallist Caster Semenya to our Cape Town office as part of our mentorship programme for employees. The story of her rise to the top of her discipline speaks to the resilience required to prosper over time. Her boldness in the face of adversity reveals deep self-acceptance and confidence. It was hugely inspirational to hear that to navigate successfully through tough times takes immense grit. She taught us that it is okay to be bold and acknowledge the awesome things you do. As she said, “I believe in everything I do”. And so do we.

However, the month concluded on a sombre and dark note with cases of brutal gender-based violence holding the headlines and our hearts, with a subsequent rise in mass civilian protests. We lend our voice in support of the calls to bring about change that improves the treatment of and respect shown to women everywhere.

What we need is less talk, more action

South Africa is in desperate need of some tangible action. For the past 18 months, we have not been short of commissions and white papers identifying the real challenges we face as a country and an economy. But to move us forward, we need to start acting. For this reason, the market welcomed
Finance Minister Tito Mboweni’s surprise release of the National Treasury’s plans to boost growth and create a million jobs.

Adding his weight, President Cyril Ramaphosa later announced the appointment of a new economic advisory panel to help turn the ailing economy around. In addition, in a move to increase both his leadership and communication to the country, the President recently implemented a weekly newsletter titled “From the desk of Ramaphosa”. While these are all good and crucial steps, some tough decisions are overdue and much needed.

A global geopolitical spectacle

Globally, the world seems a mess. Ongoing geopolitical theatrics would certainly provide enough material for the next decade of soap operas. The Brexit deadline of 31 October is looming, while across the Atlantic, Trump’s tweets have turned into marathons as he voices his disdain for his impeachment enquiry. The simmering rivalry between the US and China continues to play out with the trade wars, and increased military unrest in Syria has raised concern from humanitarian groups. Looking further east, Hong Kong is facing its first recession since the Global Financial Crisis as the negative impact of anti-extradition law protests that have escalated to violent confrontations begins to weigh.

And of course, before we get into this issue of Corospondent, here’s a strong shout-out to our boys in green and gold. At the time of writing, they are preparing to take on Wales in the semi-finals of the Rugby World Cup. Go Bokke!

In this issue

Economist Marie Antelme outlines her laundry list of concerns. With the US 10-year Treasury bond yield briefly inverting this quarter, portfolio manager Seamus Vasey provides the logic behind the widely reported and eyebrow-raising event .

Back home, portfolio manager Tumi Motlanthe outlines the investment case for Shoprite. Globally, investment analyst Chris Cheetham provides insight into the value we see in leading US cable operators. Portfolio manager Suhail Suleman weighs in on China’s influence on the emerging market basket, while investment analyst Greg Longe points out why it’s best to be circumspect about frontier market IPOs.

Trust is earned

At Coronation, we continue to seek opportunities amid the challenges, and convert them into value adds for our clients. I believe we are made more resilient by the demanding environment in which we manage the money entrusted to us. Weremain steadfast in our purpose, with our clients’
best interests at the core of what drives us. As we head into the last quarter of this decade, I wish you all the best and share my gratitude for your ongoing support.

Thank you