Investment manager Kokkie Kooyman discusses how Trump’s pro-growth policies are driving financial stocks higher, with relaxed regulations and tariff protections boosting banks. He also highlights South Africa’s economic challenges, citing corruption and bureaucracy as key barriers to growth, though recent reforms show some promise for recovery.
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Note from Accountability Now, Paul Hoffman
I heard Kokkie’s interview with Alec Hogg this morning during which interesting but difficult questions around countering corruption were raised.
Please allow me to be so bold as to refer Kokkie to the free e-book “Under the Swinging Arch” which is available simply by googling its title.
If one starts reading by going to the source judgment which is Appendix Two to the book and reading it , starting from paragraph 166 to the end , and then reading Appendix Six , some constructive answers to the questions raised with Alec emerge.
The DA has introduced a bill in Parliament that foreshadows and envisages the establishment of a Chapter Nine Anti-Corruption Commission to deal more decisively with serious corruption in SA. It will be debated in the near future. The bill is based on the judgment and the ideas promoted in Appendix Six of the book. Accountability Now has advocated the Chapter Nine solution since 2012. Its time has hopefully come.
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By BizNews Reporter
In an interview with Alec Hogg on BizNews Briefing, investment manager Kokkie Kooyman from Denker Capital discussed the financial market’s enthusiastic response to Trump’s election victory, which spurred a significant rise in American financial stocks. Kooyman pointed out that the anticipated changes in regulatory policies under Trump, along with his commitment to America-first economics, have positioned the banking sector for potential growth.
Financial Stocks Surge After Trump Victory
When asked about the reaction of U.S. financial shares to Trump’s win, Kooyman described it as an “explosion,” noting that regional and investment banks saw gains between 8% to 14%. Major players like Goldman Sachs, JPMorgan Chase, and Bank of America all experienced substantial increases, a trend bolstered by positive investor sentiment. “Regional banks have been up about 60% to 70% year-to-date, and now we’re seeing an additional jump,” he explained.
The market’s enthusiasm, according to Kooyman, stems from expectations that Trump’s administration will ease regulatory constraints and adopt policies aimed at stimulating growth and reducing restrictions on banking operations. The Trump administration’s stance is viewed as a shift away from the regulation-heavy policies championed by Democrats, which Kooyman believes will open up new opportunities for banks, especially in the area of mergers and acquisitions.
Regulatory Rollback Anticipated to Benefit Banks
One significant regulatory issue that has weighed heavily on the banking sector is the potential for increased capital requirements under Basel III regulations. The Trump administration’s anti-regulation stance suggests that such requirements may be rolled back or postponed. “This has been a looming threat for banks, and with Trump at the helm, the likelihood of regulatory relief is high,” Kooyman said.
Such a move could have major ramifications for banks’ operational freedom and their ability to engage in more profitable ventures. The relaxed regulations would not only lower operating costs but could also improve overall profitability, driving further growth in the sector. According to Kooyman, this expectation has encouraged banks to adopt a more optimistic outlook, particularly with the appointment of figures like Elon Musk as influential voices in the administration.
America-First Policies and Inflationary Pressure
Kooyman noted that while an “America first” approach might bring growth benefits, it could also introduce inflationary pressures. The introduction of tariffs on imports, for instance, would likely lead to higher prices for consumers, contributing to inflation. This, in turn, has led to a rise in the 10-year bond yield, now at 4.4% compared to 3.7% just a few months ago. “The market is already anticipating higher inflation,” Kooyman explained, as it prepares for a period where less-regulated, pro-growth policies encourage spending.
This inflationary outlook poses a dual impact on the financial sector: higher interest rates could improve banks’ profit margins on loans, but they may also limit consumer purchasing power if inflation rises unchecked.
A Return to Economic Growth: Learning from Europe
Kooyman contrasted the United States’ potential growth under Trump with Europe’s regulatory-heavy approach, suggesting that Trump’s policies might offer a growth-oriented alternative. He observed that while the U.S. and European Union were nearly identical in GDP size at the end of 2008, the U.S. economy is now 70% larger, which he attributes to Europe’s regulatory constraints. Kooyman remarked, “Europe has tried to protect everyone, but at the expense of growth. This election is about Trump’s approach to fostering growth over providing handouts.”
Mergers and Acquisitions: The Dawn of New Deals?
One of the biggest anticipated changes under Trump involves the easing of restrictions on mergers and acquisitions. Under the previous administration, many M&A deals faced significant regulatory hurdles, particularly in the financial sector, as antitrust measures prevented many acquisitions. Kooyman shared that stocks such as Capital One saw significant price increases in anticipation of a new, more favorable regulatory environment. Capital One’s shares, for instance, jumped 15% on news of potential approval of Discover’s acquisition bid.
Kooyman noted that under Democratic leadership, the sector saw pushback against mergers to prevent job losses and protect consumers. With Trump in office, many expect a shift that could see a relaxation of these rules, paving the way for consolidation in the banking sector. This is particularly relevant for regional banks, where merger activity is often viewed as a route to greater stability and competitiveness.
South Africa’s Investment Landscape: Challenges and Opportunities
Turning his attention to South Africa, Kooyman addressed the country’s economic outlook and the challenges it faces in encouraging foreign investment. Despite positive signals in areas like Eskom, Transnet, and port operations, he emphasized that corruption and bureaucratic red tape continue to stymie progress. “Corruption is still a significant issue here,” he warned, explaining that it undermines investor confidence and hampers economic growth.
Kooyman referenced the resurgence of capital investment following South Africa’s Rubicon speech during the PW Botha era, highlighting the importance of international confidence in driving growth. “The country needs capital to grow, and South Africa has been capital-starved,” he stated, underscoring that international businesses are waiting to see real changes in policy before committing to large-scale investments.
Challenges Facing the New South African Police Minister
Kooyman also expressed cautious optimism about South Africa’s new Minister of Police, who has been instrumental in increasing arrests and curbing criminal activity. However, he emphasized that while initial changes are promising, systemic issues remain. “It’s a bit like taking over a soccer team—you inherit the players, but to really succeed, you need to bring in people who want to do the job,” he observed, comparing the current leadership challenges to reshaping a sports team.
Conclusion: Optimism Tempered with Realism
Kooyman concluded the interview on a measured note, acknowledging both the potential for growth under Trump’s economic policies and the structural challenges facing South Africa. While he sees growth opportunities in the U.S. financial sector, he remains cautious about South Africa’s ability to attract foreign investment amid persistent corruption and a bureaucratic legacy that resists rapid change.
As the world watches how Trump’s policies unfold and South Africa grapples with its own economic challenges, Kooyman’s insights provide a sobering yet hopeful perspective on the road ahead for investors.
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