The hard-hitting Magnus Heystek joins BizNews founder Alec Hogg, on the topic of the ugly truth about South Africa as an investment destination. Magnus has been advising diversification and offshore investment for the better part of ten years, purely as a result of the facts. Heystek says he has an open mind about South Africa from an investment perspective, although the stars are yet to align. – Justin Rowe-Roberts
Magnus Heystek on what it would take to change his perspective on South Africa as an investment destination:Â
My views from the last 11 years have been based on facts and the analysis and extrapolation of those facts as best one can into the future. And as I said at the talk (BizNews Investment Conference), it wasn’t a political view, it was based on firstly the commodity cycle, taking one terrible dive and it dragged South Africa down with it. Over time – 50, 60, 70 years – that has always been a very good indicator as to what will follow for South Africa and the stock market. Initially the first five years, that’s exactly what happened – the rand weakened and our resources stocks got beaten, our economic growth was pulled down. The second part of the 10 year period – if I can call it that – and more to do with the political developments, the state capture corruption and everything else that we speak about on a daily basis. Surprisingly, over the second period of time, 2015 to now – the rand has been fairly stable despite being volatile. That’s exactly where it was five years ago. Yet the offshore markets have done incredibly better and that is fairly ominous if the rand starts weakening. But to answer your question and a couple of people asked me, would you advise bringing money back to South Africa and under what conditions? It’s a very valid question and one that I look out for as best I can. First of all, it’s got to be a signal from the government that it is turning around on its trajectory towards more state intervention, more regulation, more socialism and more redistribution. And you need a signal somewhere along the line that the ANC that we need to change that. So that’s what one needs to look out for. Secondly, if the commodity cycle really does start turning around, one can really recommend some commodity stocks in South Africa. And thirdly, if one can have a look at an improvement in law and order and as I said at the during our debate, the application of the rule of law, which is very important. And lastly, if the foreigners start buying our stocks again, you cannot discount the fact that the foreigners have been fleeing our stock market for a very long time. But if they start buying, you’ll immediately see an improvement in the mood. You’ll see the markets lift there and the rand will probably strengthen. But I haven’t seen it yet. You’re waiting for a heartbeat of a semi comatose patient and that hasn’t happened. But it can happen. And if it happens, I’ll be the first one to say – yes, now’s the time to bet on SA Inc. But I haven’t seen it yet. And I disagree with many of the large asset managers who keep on saying SA is so cheap and now’s the time to buy. I just don’t see it. And the market is not seeing it. I mean, our market is now down five, six per cent from its peak three, four months ago. The commodities are going a little bit flat. But if the signals are there, I will definitely change my recommendation.
On his direct approach to offshore investment:
It wasn’t meant to be direct, it was as a result of a platform that I had – you gave me a platform on MoneyWeb many, many years ago. When people ask me questions, I would answer them. I didn’t mean to be provocative or disagree with the mainstream. I gave an honest answer based on what I saw in front of me, which was blown out by other people. And you realise that there’s a massive amount of vested interests out there that needs protection and that is just escalated over time. You had columnists having a go at me and magazines calling me Dr. Doom. You can call me what you like, but give me facts that disprove what I have been saying and they’ve never been forthcoming or if they did, very selective periods. But if you look at the ten year picture, seven years, five years, three years – the local market has underperformed substantially. I’m just calling out these facts that attended to escalate by itself. I didn’t mean to be controversial. I was just giving my viewpoint.
Read also:Â
- ‘The investment industry is not a gentleman’s game’ – Magnus Heystek
- ‘Government’s intentions with the pension fund amendments are ominous’ – Magnus Heystek
- Cape Independence, Medupi mayhem and Cadre deployment with Magnus Heystek
