🔒 The Editor’s Desk: Here’s what Alec Hogg has to say to SA bears

The South African bears have been right for nearly ten years. Those who bet on SA Inc when Jacob Zuma took the presidency would be feeling the bite with nothing much to show for the last decade. But, as investment labels constantly warn us, past performance does not guarantee future results. After all, anyone watching China for most of the 20th century would be forgiven for writing the Middle Kingdom off as a basket case. But those who bet on China’s future have been richly rewarded. South Africa is not China, of course, but that’s not to say that there isn’t a bright future ahead for the country. In this week’s episode, Alec Hogg and I discuss Alec’s interview with Magnus Heystek, who has long held a bearish view on the SA outlook. While there’s no doubt that Heystek’s perspective is a reasonable one – especially given his job managing other people’s money – there is nevertheless a bullish response to the bear case. It takes all sorts to make a market, after all, and in this episode, Alec explains why he’s betting on a positive future. – Felicity Duncan

Hello, and welcome to this week’s episode of The Editor’s Desk here on Biznews Radio. I’m Felicity Duncan and with me, is Alec Hogg. Now Alec, it’s been a big week for Biznews and I wanted to just catch up with you because you have been running around doing a lot this week. You ‘premiered’ a new live radio show and you’ve also created a very exciting new group that the Biznews community can access and join. Do you want to tell us just a little bit about what you’ve been up to?
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Well, of course. Then, I’m also back home in South Africa in the beautiful winter sunshine of Johannesburg and as you can hear, there are birds in the trees accompanying us in the background. It’s great. It’s been a good week, Felicity. What we did a few months ago is that we started a WhatsApp group for Biznews Premium subscribers. It’s been very popular. Over the period, literally one person has left the group so clearly, we’re giving the right  kind of service on that side and I thought ‘well, maybe we should be trying to find a way of expanding this to the whole Biznews community’ and this week, we launched it via Telegram and in literally a couple of days, we’ve gotten more than 800 people who’ve signed up. We keep it restricted. We don’t post a lot there.

In fact, only Stuart, you, and I have admin privileges. In other words, only we’re allowed to post items so you don’t have a Tower of Babel going on with everybody trying to have their own word and that makes it a lot easier. I think it was a little bit irritating for the early joiners of the Telegram group because every time a new person joins, it pings on your phone if you don’t switch the notifications off but if you switch the notifications off, people go on there. They’re identified by the name they give Telegram. One person was particularly irritated. He said, “Now, everybody knows I’m a member of your group” and all you really have to do if you don’t want anybody to know you’re on Telegram is just put a different name in. It’s that simple. Anyway, that’s worked very well and we used that to good advantage on Thursday when literally, it was a test.

I’ve been playing around with live internet radio. We’ve got a 24/7 internet station on Biznews. You can access it on the top-right of the home page on desktops or you have to go down the page a little on a mobile to find it but really, we’ve got the correct licenses and everything for the music. So, we’ve got music playing and then we add in the occasional interview. We don’t really focus as much as we had intended to because there had been other things going on, including moving continents – moving back home. I’ve now finally got the help of Gavin Buckle, who’s a sound engineer here in Johannesburg who’s helped me a lot – the ability to transmit live and so we had our first live broadcast on Thursday night. It was a one-hour show.

We’re going to do one per week every Thursday in future, from 5-6 and got some old friends on to give us some support there. Magnus Heystek, David Shapiro, and Sean O’Connell (an entrepreneur from Cape Town). They all had interesting stories and we opened that up to the Biznews community, sent through a link on Telegram and those who are members of Telegram could click on the link and come and join us. We also obviously sent a link to our WhatsApp community and it was very late in the day. I didn’t want to have a huge audience, given that we were really testing but things worked pretty well. There were a few small issues on the technical side where the music was a little louder than it should have been at times, but nothing that I think can’t be ironed out pretty quickly.

So, from Thursday, we’ll have another one-hour show and let’s see how it goes. The beauty about this Felicity, is that we can open up to the entire Biznews community – tens of thousands of people – when there is something important/when something live happens. We can either cross to the event or broadcast it to them live, just by sending out a link to our community members. So, very exciting times.

Yes, it’s exciting stuff and a nice opportunity for people to be up-to-the-minute with what’s going on. Now, you mentioned that you chatted to Magnus. That was a very interesting interview. Magnus is famously… pessimistic?

Bearish.

Bearish, that’s a good way to put it – he’s famously bearish over the last few years. He’s a famous bear on South Africa and a big advocate of investing offshore. He really pushes people to allocate the maximum that they can in offshore assets. He emphasises protecting against the Rand and things like that. It was interesting to hear you chatting to him because of course, you come from the other side where you’re quite bullish on the future of South Africa.

Indeed. I think what happened Felicity, was that in the last ten years, it’s been a one-way bet almost, against South Africa. We had Jacob Zuma in power. We had incredible incompetence within government and of course, corruption as well. When you’re doing the kind of work we do, you get to know these things and you can’t always publish it so it’s information that you have that shapes your opinions and your views, but you’re unable to go public with it because… Well, we were sued enough times by the Guptas so we know the cost of lawyers in South Africa and London. They’re not cheap. So, you have to hold back because there are also things that you can’t prove but it works the other way as well. So, when you’ve been exposed – as I’ve had the privilege to be – to information that perhaps, is not fully in the public domain, it does create/affect your perception of things.

Now, where Magnus and I differ is that he believes that the mess of the past ten years is going to continue into the future whereas my perception is that there really was a watershed on the 18th of December 2017 when the ANC voted to bring in Cyril Ramaphosa and not to allow continuation of the Zuma dynasty. That’s effectively, where we diverge so I’m looking ahead to a very different country, to a country that has shown incredible resilience in being able to get through an impossible period. It has now managed to throw it off because of its safeguards, because of its institutions, and because of the NGO’s (non-governmental organisations). Because of a lot of brave people who stood up and were counted, it’s now going into a future that to me, all of that will be rewarded for. Magnus says he wants to see proof.

He wants to see evidence first and, in a way, you can understand it because he’s dealing with other people’s money so he has to look a person in the eye and say to them, “This is why we have done X, Y, and Z for you with your investments”. If it goes wrong, he’d have to go back to them and say, “Well, I’m sorry. We made a mistake because we did the following.” However, when you’re dealing with people’s money, you tend to be more conservative. Hence, he would be looking at the future of the country from a more conservative perspective. What I will say was that at the end of our conversation on Thursday night – and it was a live radio conversation – he did say that he’s just looking for evidence now. He does believe that it’s possible that things will turn around and South Africa is pretty cheap but he wants to see the evidence first.

So, it’s almost like he’s gone from far out in the spectrum of saying ‘take all your money offshore’ to ‘maybe this Ramaphosa guy will get it right’. For me, I’m convinced that Cyril will. I’ve mentioned a few times before that I’m busy doing the audio book of the biography of Ramaphosa. He has an amazing life story and he has achieved so much that people don’t know or have forgotten about. Just starting off with what he did at the National Union of Mineworkers back in the 80’s. It’s almost like he’s been through the whole process to get to where he is now and if you believe in these things that there is a greater purpose to all of our lives, it’s almost like all the experience he’s had up to this point, is now going to serve him well into the future and serve the citizens of South Africa.

Now, there’s always a danger of course, that people invest too much hope in a single person, right? I think that you’re right about Ramaphosa and he is a man of integrity who really wants to turn things around for South Africa but I think Magnus is right to say, “Well, is that going to be enough? Is one man’s good intentions enough?” and so, that’s where the question of evidence comes in. So, what do we want to see? Ramaphosa’s job really, is going to be rebuilding the institutions in South Africa and then, implementing policies that actually work to make a difference in people’s lives. So, what kind of evidence are we looking for?

That it’s not just Ramaphosa’s good intentions, but that there are actually practically things happening in the government, in the legislation, and all these aspects of things over which he has some measure of control that shows that it’s not just his intentions, but there are actually things happening.

Yes, and that’s the million-dollar question. To me, we’re already seeing it. We’re seeing it through the appointments. Interrogate the appointments that he’s made and how he’s made them. The actions on things like the Commission of Enquiry. You just have to wonder what the country would be looking like if someone like Angelo Agrizzi for instance, hadn’t got up and made the incredible moves that he made at the Zondo Commission. For instance, it’s likely that Jiba and Mrwebi (who were number 2 and 3 at the National Prosecuting Authority) would still be hanging in there. Certainly, Mokonyane, who has now been pushed out, would almost certainly have been a member of Ramaphosa’s cabinet etcetera. So, things are happening so rapidly in South Africa and as a normal citizen, the media is important but it’s not the middle/the centre of your life.

Whereas for people like us who work in the industry, it is the centre of our lives and we’re watching it closely. Even for us, it’s hard to keep on top of the developments. Cyril has moved very fast. He’s moved in the right kinds of ways and you would expect that his cabinet would do the same. Again, from his book from the days when he was the General Secretary of the National Union of Mineworkers, he’s always been a perfectionist. He’s always demanded a lot from the people who work around him because he is driven by a higher purpose. Of this, I have no doubt. So, you’re going to see that from the cabinet. You’re going to see a cabinet that is functional. You’re going to see harder working people implemented there and you’re going to see a consequential analysis of their positions.

For so long, South Africa has been the Republic of No Consequences because it didn’t matter what you did; there was always some other agenda that was happening behind the scenes that enabled you to continue doing that. The Ramaphosa administration: I’m expecting that what we should look out for is consequences of actions and obviously, he’s going to pick the best people possible for his cabinet. As we talk now, we haven’t had word on what the cabinet is yet but you can also imagine that he’s going to want them to deliver. If you talk to ordinary South Africans or the people in this country and their response is, “Geez, Cyril’s got a lot of work to do.” Of course, he has, but he’s only the leader and he’s going to surround himself with others who can do the implementation and it’s not like he hasn’t done it before.

He did it at the NUM (National Union of Mineworkers). He did it at CODESA. He’s done it within his own business enterprises. When you put that track record together; here’s a man of 65 with enormous experience who can now implement and find the right people to support him. I remain as excited about South Africa Inc. as I would about a company that’s got a new Chief Executive after a really bad guy had been kicked out and the new Chief Executive is putting their person into the right positions that they need – a new Financial Director, a new Operations Manager, a new head of HR, etc – then you would look at it as a turnaround situation and that’s very much the way that I look at South Africa Inc. It’s only 58-million people and that might sound a bit crazy, but it’s half a percent of the world’s population.

It’s not an India where you have 300-million people who are unemployed and that’s what Modi has to look after. Or, a China where you’ve got a similar situation where many people need to be brought into the urbanisation and the economy – just hundreds of millions of people. The whole scale there is so much bigger. The chances of making a mistake are much bigger. The need to attract massive amounts of capital to move the dial… South Africa – 58-million people. It’s manageable. It really is relatively easily done and Ramaphosa’s the kind of guy who understands that. He’s got the negotiating skills to bring others to the party and that’s why I would look ahead with confidence. So, I think we’re on the right path.

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