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Continued global and domestic uncertainty calls for safeguarding of investments

*This content is brought to you by Carrick Wealth, leaders in wealth and capital management

Ongoing volatility in the South African domestic political theatre, shifting dynamics in other countries of the region and sudden volatility that rattled stocks and investors globally since last Friday, have one consequence in common: continued uncertainty.

Uncertainty brings heightened risk that should inspire investors and high net worth individuals everywhere to take appropriate action: reassess, re-strategize and act. Before despairing too much however, remember that all of this fits into the current global phenomenon of significant change taking place everywhere.

In Europe the mainstream parties, grappling for new direction, are starting to sing the same song as the populists, as The Economist so aptly wrote this week under a sub-heading, Dancing with danger. That is something South Africa’s governing ANC has for some time already been doing in response to the radical populism of the Economic Freedom Fighters (EFF).

In the larger regional African context too, change dynamics continue to produce levels of uncertainty and in some cases hope, in countries such as Kenya, Angola, Namibia and Zimbabwe. And globally a domino effect rippled through stock markets this week following a major corrective sell-off on Wall Street as the US adjusts to the effects of Trump economics and populism.

For Carrick Wealth, all of these tumultuous developments just reaffirms what we have been advising high net worth individuals and investors all along: in order to protect one’s wealth and investments in times of so much uncertainty, you need to take charge proactively, reassess and revise where necessary your portfolio, diversify, and invest at least a substantial portion offshore in more stable jurisdictions. In such volatile times it is never too soon or too late to consult an expert financial adviser about the available options and strategies.

Regional challenges

Many change dynamics producing their own uncertainties are also in play in other parts of Africa. In Zimbabwe the recent change of government continues to bring hope of positive and growth-orientated change. But challenges remain immense with the country desperately in need of forex and development aid. Both opposition parties and the governing Zanu-PF under new president Emmerson Mnangagwa are shopping around abroad for help. With elections scheduled for around mid-year, the new dispensation and overall stability will be put to the test.

Namibia is facing a growing economic crisis and has instituted cost-cutting measures. Its mainstay fishing industry is under pressure due to severely declining fishing stocks, while drought brought on by climate change and the El Nino weather effect are causing havoc in the agricultural sector. In Angola the succession of President Eduardo do Santos by President Joao Lourenco has ushered in welcome economic reforms and efforts to stamp out corruption. But the path to transforming the oil-dependent country’s economy will not be an easy one as shown by the widespread anger that followed the devaluation of the local currency and rising prices as a floating exchange rate is phased in.

In Kenya the political crisis continues after last August’s presidential election was annulled, with opposition leader Raila Odinga boycotting the re-run because he claimed it was rigged. More recently President Uhuru Kenyatta has outraged human rights groups with crackdowns on media groups and opposition political activists and others.

Domestic volatility

After several days of high drama in the South African political arena South Africans remain pretty much in the dark as to what happens next.

It started with rumours and speculation about President Jacob Zuma’s imminent resignation, followed by signs that he was doggedly digging in and refusing to step aside for new ANC president Cyril Ramaphosa. High-level meetings were called in the ANC to plot the way forward. Meetings were held between top ANC leaders and Zuma, and between Zuma and Ramaphosa. The all-important showcase State of the Nation Address (SONA) was postponed at the last minute, with a dispute over whether it would be delivered by Zuma or someone else like Ramaphosa, remaining unresolved. And all the while rumours and speculation abounded.

The SONA is used not only as a report-back by the executive of the past year’s achievements, but also spells out the political programme of government for the year ahead. The national Budget that always follows the SONA, is based on this programme. Now both are temporarily in limbo and uncertainty again prevails. While Parliament can still open and continue its sitting without the SONA, its programme may be in disarray. If the Budget too has to be postponed, it could have serious consequences.

Zuma alone seems not to appreciate that he has reached the end of his political road; alternatively, he seems hell-bent on making his inevitable exit as costly, confrontational and unstable as possible, even seeming willing to risk taking his entire party and the country down with him. For the ANC the forward options are Zuma’s unlikely voluntary resignation without further ado, or alternatively the high risk, time-consuming options of a negotiated exit settlement between Zuma and the ANC, Zuma’s recall by the ANC, or removal by Parliamentary impeachment or vote of no confidence.

South African President Jacob Zuma. REUTERS/Mike Hutchings

On Wednesday the country waited with bated breath for an announcement from Ramaphosa on Zuma’s future. All he could offer was: negotiations continue, we are working on it, give us a few more days. Even the more optimistic among us would say that does not bode all that well.

Even if Zuma does finally depart the political centre stage, Ramaphosa and the new ANC leadership’s task of turning around their party, cleaning up government and putting South Africa back on a growth path, will not be easy, quick or risk-free, as Carrick has warned all along. More political and other challenges and upheaval may loom with a general election some 15 months down the line; the radical and populist opposition EFF, seeking new relevance after Zuma, promising to attack Ramaphosa even more vehemently than Zuma; and an unresolved major water crisis in the Western Cape remains.

Take action now

It is clear we live in unusual, often volatile times where uncertainty and unpredictability prevail. You can, however, avoid the worst impacts of these developments. For more information on how, you can contact one of Carrick Wealth’s qualified advisers at [email protected] today.

  • Carrick Wealth is a registered South African financial services provider specialising in South African and international financial planning. Carrick is also licensed in Zimbabwe and Botswana, and holds three global licences in Mauritius. Carrick at all times maintains its independence with regard to product providers and asset managers, providing bespoke risk assessment, financial planning and other services to high net worth individuals (HNWI). Through our own qualified and experienced financial advisers, as well as through partnerships with industry leaders in the fields of foreign exchange, tax, international property, offshore bank accounts, trusts, wills and estate planning, Carrick is able to provide the highest levels of service for your financial planning and investment requirements, both offshore and domestic. This communication is intended solely for information purposes for the use of designated recipients and is not an offer, recommendation or solicitation to transact. While it is based on information available to the public and from sources believed to be reliable, Carrick makes no representation that it is accurate or complete or that any returns indicated will be achieved.
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