In this Special Podcast, Standard Bank Webtrader’s Fatima Essop Mohamed takes us through the steps to becoming an investor in global shares. The platform is available to anyone – not just those who have accounts with her bank. And have a look at the short video below where she takes us through a competition where thousands of dollars have been put up as prizes. – Alec Hogg
This Special Podcast is brought to you by Standard Bank Webtrader, whose big boss Fatima Essop is with us in the studio today. Fatima, we’re into the quarterly earnings report season for the American companies. Yesterday in fact, we had a couple of big companies (two of them in our portfolio) reporting. Amazon shot the lights out – seven percent increase in the share price. Google was up by three percent on its numbers. There’s a lot to talk about. Maybe be we can start with Google because that is a company, which many people in South Africa who are investing offshore, own. What was your take on their results?
Thanks, Alec. With regard to Google, it’s one of those tech and social media shares. It falls within that basket. It’s really going to carry the U.S. markets from strength to strength; not only this year, but as I see it, for another two to five years. Airlines and consumer stocks are bringing it down on the other side, but as I said, the Google stock (if you looked at it yesterday) and the advertising that comes with Google (similar to Facebook and Amazon), that’s a winner for us.
How many of your clients own Google?
You’re looking at about 50 to 60 percent who have an interest in Google – not necessarily direct, but definitely through the ETFs.
Just as a broad base, Webtrader has been around for about a year now.
We’ve been alive and kicking for 18 months. It’s been a beautiful 18 months, at that. We’re currently looking at South African individuals only and if you look at the types of investments happening on Webtrader, you have a bigger base of investors looking for stocks and then Exchange-Traded Funds as well, given the Dollar/Rand. Additionally, you have that pocket of contracts for different traders and those FX Traders, too.
What does Webtrader’s ability give you? What can you do with it?
Webtrader is similar to moving from a hand to an entire arm in that previously, you would have had direct access to the JSE. For example, using online share trading with Standard Bank or SPG Securities. Alternatively, you would have access to the JSE through a broker. With Webtrader, we’ve expanded on our online share offering to provide you with online access without requiring any downloads for you to access 29 markets in 19 countries. Suddenly, your landscape changes to 18,600 available outside of our borders. The truth is that we as South Africans are currently consumers of those same big brands – with Google being one of them – as opposed to being ‘just a consumer’. The drive now is to move into the investing space.
Are you finding that the take-up has been more aggressive than anticipated?
I think that as South Africans, we’re generally conservative investors so it’s not necessarily product-specific. However, we exercise a lot of caution with regard to where we place our money. I think that 2008 is still very fresh in our minds and with that in mind, clients are keen on getting started. The Rand/Dollar does play a big role in terms of clients moving funds across. All investment does happen in USD because of exchange control regulations. You’re finding that people are keen, they open the account, and then they need a little bit of time and comfort to find their way around this much larger universe before they really start investing those funds or taking the leap of buying those stocks.
Presumably, you need a tax clearance before you can even get started.
We’re fortunate in that the first million doesn’t require a Tax Clearance Certificate. You’re able to move that quite easily. Depending on whom you bank with; you could go into a branch or it is available online. Once you’re ready to move those funds, there is some BOP reporting that happens, to SARB. You need stuff like a tax number, a green barcoded ID, and then Bob’s your uncle. Anything over the million – that’s when SARB pre-approval comes into play.
If you don’t bank with Standard Bank, are you going to find it more difficult then to participate in Webtrader? I ask this because we’re seeing with the Biznews Global Share Portfolio, which is doing really well; people are saying ‘how do I get part of this’. I say to them ‘firstly, to talk to your guys at Standard Bank’ and they say ‘oh well, I’m not there’. How do they get going?
We’re agnostic of where you bank. What’s important is that you have an account that allows for moving funds offshore and that’s the case with most current accounts, which are operated in this country. Once you’ve dealt with your bank (for example, through a Forex Counter), if you look at the banking sector in general; apart from FNB, there aren’t any other banks that allow for Forex payments or cross-border payments (electronically) or using your online banking. You would have to either make use of your private banker. Alternatively, you could use a Forex counter in the branch
If I want to get going with a portfolio, presuming that I don’t bank with Standard Bank; firstly, I need to have an account with Webtrader, obviously. What would I need to do then?
Then you would go into your bank and you would go to the Forex counter or speak to your private banker and say ‘I would be looking to offshore funds or making a cross-border payment’. The bank would then facilitate it, together with BOP reporting. Essentially, you complete one form, which does find its way to the SARB for exchange purposes.
You then open up your account with Webtrader and away you go.
The account’s already open. You’ve arrived at your brand. Now you have the banking details that we’ve provided you with, and you have a reference number (being your account number with us). At that time, when the payment is made, it usually takes about two days, depending on the bank with which you’re dealing. That’s the settlement period. Funds will arrive in your account, provided you’ve used the reference number we’ve provided to you. Those funds will be auto allocated and available for trading immediately.
It’s rather simple stuff, then. You have the first million that you don’t have to worry about – tax clearances or anything else -, just go into your branch, open your Webtrader, and then you can participate and replicate what we’re doing with our share investment, which has done incredibly well. I haven’t looked at it today, but I think we must be about 14/15 percent up now.
What’s it now, four-and-a-half months? That’s rather impressive and not a growth that you would have seen in a hurry, just using the JSE, for example. What’s important for investors to know is that right now, emerging markets are lagging behind. The most growth you’ll see is in Europe and the U.S. and really, that’s where you want to be playing.
Now I know you’ve been spending a lot of time looking at the international markets in the last week. What highlight (for you) has come out of this quarterly season, at this point?
For us, it’s very surprising that you haven’t seen big leaps and jumps considering that the markets have been quite antsy since late last year (or the last quarter of last year). I would have expected to see quite a few leaps and bounds. If you look at it though, the market sentiment seems to be rather casual. Yes, with Amazon for example, you’ve seen a seven percent growth and with Google, you’ve seen about a three percent growth after results came out. However, between this week and next, you’ll find that things seem to peter out. I think investors are using this information to make their investment decisions for later on this year. There remains a lot of strength in the tech and social media stocks. The biggest excuse (perhaps ‘excuse’ is the wrong word to use, but I’m going to use it anyway) is that the Dollar is quite strengthened against the Euro and that’s being used as a reason/excuse for the majority of the companies in terms of them not reporting stronger…
Not achieving some targets that the unlisted were expecting. Of course, Facebook was one of those. I think IBM fits into what you were saying earlier because they came out with rather good results and not a whole lot of movement on the market at that point. What is interesting though is that last night, NASDAQ finally got ahead of where it peaked in the year 2000, so it’s taken them 15 years to wipe out the Dotcom bubble. Of course, some people are now saying ‘here we go’. Do you agree with that?
For me, Dotcom is really a fallacy – depending on from what side you look at it. What makes up Dotcom is the fact that all companies, regardless of whether they were technology or social (at that time, there wasn’t really, much social media going on), were seeing a resurgence in terms of their reliance on technology. Parking Dotcom – I think NASDAQ is definitely… As you said, 15 years on. Much has been happening in those 15 years. 2008 is one of those bumps that also had an impact. I think we’re in a very good space in terms of Developed Markets. They’ve found their strength post-2008 and we’re really seeing a reliance on those markets now. Again, for me, that’s where you’d want to be.
For South Africans who are looking to hedge themselves against the South African Rand’s weakness, this is the way to play it.
Investor sentiment seems to be on two sides. There’s the one looking to hedge, and then there’s the other one that’s holding back/waiting for the Rand to strengthen against the Dollar so that they could purchase more with their Rands. We’re of a similar view to the general: the biggest risk you take in stock markets is not risking at all or not trading at all. Don’t wait. Get in. Don’t necessarily go for those penny stocks, but look for something reliant. If you’re perhaps looking to not feel the bumps that much in terms of the currency cross and then the brokerage costs, go buy into an ETF. It has a broad spectrum, covering sectors as well as the big players out there and then stay there for a while.
The ETF we have in our portfolio is the Vanguard S&P 500 – a pretty good place to start. Fatima Essop Mohamed is with Standard Bank Webtrader and this special podcast was brought to you by Standard Bank Webtrader.