Magnus Heystek – ‘the commodity cycle is in full play’

Magnus Heystek of Brenthurst Wealth Management has been a household name since the 1980s when, as an award-winning finance editor, he introduced and developed the concept of demystifying personal finance to SA. Heystek joined the BizNews Power Hour as co-host on Wednesday and, true to form, provided valuable insight on a range of topics – particularly the commodity super-cycle and Counterpoint Value Fund. – Nadya Swart

Magnus Heystek on the Satrix 40 and whether it’s time to reinvest in a global Satrix:

The Satrix 40 has had a nice run the last 12 to 18 months. The commodity cycle is in full play – that’s very evident all over the world. Commodity prices, precious metals and our trade balance is in a surplus. In fact, it’s the highest surplus it’s ever had. That would count against a weakening or a sudden weakening in the rand in the foreseeable future. So, I will hang on and play out the commodity cycle – which is normally good for the JSE, good for the rand – and wait until the cycle turns, which we don’t see yet at this point.

In fact, we’re very bullish and we’ve actually had a look at Piet Viljoen from Counterpoint’s Value Fund. It’s doing absolutely mind-boggling stuff. It’s up 30%, he is in all the right counters. So, I would not make that switch now if you’re in the JSE. You’re having a very nice run – play it out.

On the responsibility of large South African institutions and whether or not some sort of mindset change is required:

Indeed. You will remember – as a fellow journalist in the 90s and the early 2000s – we had a raging market in the emerging market stocks, the development capital sector, the alternative market, and money was pouring into these small startup companies. We used to go to launches almost every week as financial journalists. There was this hive of activity and excitement. It’s all died down and since then the small-cap and the mid-cap sector has been a graveyard as an investor. And it’s all part of this bigger picture that the fund managers tend to focus on the bigger dual-listed stocks. Maybe they’re all hiding – for safety reasons – in the same stocks. There’s mass concentration, they’re all buying the same stocks, also in some there are virtually the same kind of investment returns – which is not good for the country.

The JSE is shrinking, it’s not fulfilling its role as a creator of fresh capital. Foreigners are fleeing our market and even South Africans are taking money out of the market. So, it’s more than just the one listing of Revego. There is a bigger macro number here at play, which needs a better analysis than I’ve just given you. But it is worrying that a lot of companies are saying – and they’re delisting – ‘The JSE is not doing what it’s supposed to do, we are either going to do it privately or we’re going to do it somewhere else’. So, it is a worrying trend which has been going on for about 20 years now.

On the ANC’s suspension of Ace Magashule:

It can only be seen as good news. I mean, it looks like President Cyril Ramaphosa is strengthening his position within the ANC and that must be good news for South Africa. No doubt about that. It looks like it’s been a last minute stand-off between the so-called Magashule camp and the Ramaphosa camp, but the fact that the top six or the NEC six have signed off on this temporary banishment into the wild is a very good sign.

It might just be a political move, but he had no choice. I mean, they went out and said it is going to happen. And if it did not happen, there would have been a severe reaction, I think, from some politicians and the rest of the world. So, it can only be seen as good news and we must take these good news items when they come along and really applaud them.