Unusually for us, BizNews has kept banging on about breakthrough exchange control relaxation that’s been put on ice. Because it’s that important. There’s plenty on the subject courtesy of the rarity called Magnus Heystek (above). Independent, forceful and impervious to barbs slung by vested interests, Heystek reminds one of the child who called out nudity of that ‘newly clothed’ emperor. His rational arguments regularly and mercilessly pierce the industry titans’ spin doctoring.
Read also: SA’s 30% offshore allocation rule: it’s a dirty trick – ask Magnus Heystek
For those who haven’t been following the story, Pretoria issued a long-in-gestation circular last month allowing 100% of SA’s retirement funding to be invested in any Rand-demoninated asset – including, specifically, inwardly-listed baskets of foreign shares via low cost ETFs. This removal of a 30% cap on 99% of the investible universe was long overdue. Big asset management companies believe differently, stated their case directly to the authorities and the circular has now been put on hold.
As Heystek points out, the industry’s reaction was all about self-interest. Despite a status quo that has delivered shockingly bad returns to clients, SA asset managers rake in billions via fat salaries and bonuses. Reason: they have a capitive market. The infamous Regulation 28 forces SA savers to inject 70% of their retirement pot into a dark hole whose primary benefit is to support vested interests.
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Read also: Magnus Heystek on Regulation 28: Hell hath no fury like vested interest scorned
An astonishing leg of the saga has been how, instead of fighting for readers, SA’s popular press swallows a ridiculous defence of the status quo on grounds of retirement funds needing to ‘match’ local liabilities (future pensions) with local assets. What absolute rot. Zimbabweans were forced to invest their retirement savings in ‘local assets’ like Zim Dollars. That didn’t end well for anyone. Unless Pretoria holds the line, neither will this.
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