Steven Nathan explains why he’s optimistic about 2022, wonders about Prosus CEO’s huge bet

BizNews regular contributor and passive management pioneer, Steven Nathan, reflects on a restful festive period and looks ahead to what lies ahead for the financial markets in 2022. South Africa has grossly underperformed the returns experienced by global markets over the past decade. This underperformance has been driven primarily by an incompetent ruling party, with fraud, corruption and aimless economic policy have been constant headwinds for the private sector. Steven believes a more supportive economic policy could lead to growing key economic indicators such as GDP by more than 5% per annum for the next decade. To wrap up the conversation, Steven discusses Bob van Dijk’s R150m plus investment into Prosus, which will be seen as a sign of confidence by shareholders. – Justin Rowe-Roberts

Steven Nathan on what keeps him awake at night:

Well, in a South African context, the issue is confidence in the country, driven primarily by the views towards government and the safety of its citizens, if we look at safety and well-being. [On] either side of the spectrum, people who are financially well-off or comfortable, look at safety; am I going to be safe and are my children going to be safe? Is this going to be a country where we can live a good life from a safety perspective? And on the other end of the spectrum, it’s about whether we have an opportunity to have jobs and a decent standard of living. The government has got to address both of those. What we saw in the July riots, there was obviously a political element to that. There were a lot of dissatisfied and disenfranchised people. For me, that would be the main risk South Africa faces because we have so much potential in this country and we all talk about it. We talk about the untapped and the potential we can unlock. I believe the government is the main catalyst to do that but they cannot do it on their own. They need the support of business, labour and other kinds of stakeholders. The trick is for them to build those bridges and get South Africa working more collectively for all stakeholders. In the last few years, we’ve been pulling each other apart. As a consequence, we’ve been tearing down rather than building up and creating the confidence and the foundation for everybody to benefit.

On what makes him excited about South Africa from an economic perspective:

It is that untapped potential. South Africans are incredibly optimistic, resilient and entrepreneurial. We are used to dealing with challenges because if you look at how well the country has done despite all the challenges, corruption, incompetence and maladministration we’ve had. So, there is incredible resilience here. South Africans of all races are very proud of being South African and we want to help each other. There is so much potential that if we had the right environment – a conducive constructive environment – there’s no doubt in my mind that South Africa could grow at between 5% and 8% per annum for 10 years if we had the right enabling environment in place. Unfortunately, we haven’t done that but the potential exists. We have the infrastructure and financial institutions to do so. 

On where to be positioned for 2022:

If you look at the globe, what is always interesting and marginally concerning is just how important the US is. The US has been 50% plus of the global stock market for a few decades and it contributes less than 25% to global GDP. Yet, it contributes more than double that to the stock market. Now that seems a big dislocation. Often, when you’re talking about where you want to invest, you have to say: do I want to be overweight or underweight in the US? What is interesting about the US and [plays] in its favour is that it has got some of the biggest multinational companies in the world and a lot of the profits they’re earning are not necessarily only in the US. It has done well economically because of technology. But I think the US is probably not going to be as hot as it has been. I would tend to be a little bit underweight in the US on a global basis.

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