In the follow-up to his BNC#5 presentation, Piet Viljoen delves into what he thinks will happen in 2024 if either an ANC/EFF coalition or the Rainbow Coalition assumes power and what it could mean for investment performance. He also offers his thoughts on Bitcoin and its place in today’s turbulent society.
Extracts from the interview
Piet Viljoen on what would happen if the Rainbow Coalition had to assume power in 2024
Well, then I think our assets here would fly. It would be the best performing country in the world in terms of investment performance. If that happened, because then you have long term investors who would recognise that structures would remain intact, would be strengthened, and looting would reduce. And look, all politicians loot. Just some politicians loot more than others. Looting would reduce. It would be a better environment in which to make long term investment decisions for businesses, which is a good environment for investors. and at the moment shares are discounting a bad outcome, not the worst outcome, but they’re discounting a bad outcome.
So if they have any better outcome, then share prices would rerate quite dramatically. I mean, as I said, the banks have fees of seven or eight in South Africa, you know, why not in a PE of 12 or 13 if things normalise, which is, you know, where they should trade, that’s a 50% uplift just in capital value. And then you’ve got growth of 20% carrying on because now people are investing.
His views on Bitcoin
I think there’s a place for bitcoin. I think Bitcoin and Ethereum, these sort of dominant coins, you can actually call them programs rather than coins. I think coins are a bit of a misnomer. I think there’s a space for them. In countries with unstable political systems, monetary systems where you have more and more controls coming in terms of the movement of capital, that sort of thing. To move bitcoins around the world is quite easy. So that to me is a cloud for these sorts of electronic tokens, if you want to call it that. So I think it’s obviously a base for that. But at the end of the day, these things are commodities and the price is determined by the cost of mining them or hashing out the bitcoin. The cost of that will determine the value of Bitcoin. Bitcoin is not worth $60,000 because it only costs you 14. Currently it only costs 14 or $15,000 to produce a bitcoin. And that’s like any commodity that determines the value of that asset.
On Bitcoin becoming more valuable if there is an ANC/EFF coalition in SA
Yeah, it becomes valuable in the sense that you can own an asset which is freely transferable overseas, but it doesn’t make it intrinsically more valuable. It’s just for you. But for the rest of the world it has exactly the same value. But you can swap it out for dollars if the on and off ramps are available and free to use, which I think they are starting to clamp down on some of them. So that is a risk you take in owning Bitcoin and Ethereum and one of these things is that they clamped down on, on and off ramps. So there is a risk to any asset. It doesn’t matter how attractive it is. And therefore, again, you should approach this as a ‘bundle of twigs’ problems. How much do you allocate to some of the Bitcoin living in South Africa? And by the way, at the moment, exchange controls are basically, for most people, non-existent in South Africa. In fact, they relaxed in the budget a year ago, even further. So it’s not like we need that right now. But you never know things could change in the future.