Steven Nathan – 2022 could provide mixed investment performance 

10X founder Steven Nathan shares his rational opinion on several social and investment matters in the limelight. Mandatory vaccination, which many of the large South African corporations are implementing, is discussed. Nathan outlines that countries with relatively higher vaccination rates have seen a bigger uptick in economic growth than those with lower vaccination rates. He talks about the risks facing markets at the moment: lofty asset prices, inflation and the Omicron variant. Tencent’s investment into South African challenger bank TymeBank rounds off the conversation. – Justin Rowe-Roberts

Steven Nathan on his view on mandatory vaccination

I think investors are paying close attention to vaccine rates and the potential for mandatory vaccinations. I guess, starting with the government. The evidence shows countries with higher vaccination rates have had better economic progress. They’ve recovered quickly, much quicker than countries with low vaccination rates and generally are doing better. [In a] lot of these countries, their GDP is higher than what it was before Covid-19. In general, investors would say the higher vaccination rates – whether driven by the government or by the private sector – is better because it is linked to strong economic growth. And that is much better for companies and their profits. At a company level – within a company with different stakeholders – are you protecting your staff or protecting your customers. If you’ve got happy staff, hopefully, you have happy customers. 

On whether the markets overreacted to the Omicron variant 

Well, it is difficult to understand the markets because the markets also take a very short-term view. Often, it is, if you’re going to panic, panic first. When you do see some negative news like a new variant, that could result in lockdowns and less travel and less commerce globally, then you are going to see a potentially negative reaction. But I think it’s very short term. I think markets are a little bit concerned, as they should be because prices are at elevated levels, valuations are at elevated levels. So, a lot of good news is in the market. And then when you get a negative surprise in a good market, there is more room to react on the downside and there are other concerns, such as inflation. The global supply chain is something that has been underplayed and not as well understood by central banks. I think this issue of whether inflation is more permanent or temporary … seems to be that it’s actually not temporary and there is some kind of structural change going on with inflation because of supply chain pressures.

On the market prospects for 2022 

The stock market tends to be a forward-looking indicator. It’s normally pricing in what is going to happen in 12 to 18 months’ time. That is generally what happens. There is often a disconnect between what they call the real economy – the way we feel things at the moment – versus the stock market as a forward-looking indicator. The stock market has really been buoyant and I think it is surprised the vast majority of people at how well it has done, although it has been concentrated quite narrowly in the tech sector. We have seen that other sectors have subsequently benefited. So, there’s a lot of good news in the stock market and I think we’ve all got to temper our return expectations going forward.

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