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Investing into Local or Offshore Equities

In today's discussion, we'll delve into the dynamics of the South African economy in comparison to offshore markets. Now please remember that we love South Africa, and I'm of the view that we have one of the most beautiful countries in the world, but from an investment perspective, its important that we look at growth for investors.

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Wall Street financial services' house view suggests that the economic landscape in South Africa is presenting sluggish growth prospects for the stock market. Research indicates that the Johannesburg Stock Exchange (JSE) listed companies are grappling with challenges stemming from high business closures, reflecting a somber economic climate and challenges faced. Over the past year, the JSE yielded a modest return of just above 7%, and year to date return of -0.15%. It will certainly present opportunities for investors in the future.

A noteworthy article from Business Day, citing insights from Ninety One, aligns with this perspective. It highlights a concerning trend: over the past decade, South African equities worth over R700 billion have been offloaded to foreign investors. Additionally, the JSE all-share index only managed a meager 2% annual return in dollars over the past ten years. Amidst this backdrop, significant corporate maneuvers, such as BHP's attempted takeover of Anglo, and the exit of a longstanding petrol giant from the South African market, underscore the shifting tides within the domestic business landscape.

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Forecasts for annual growth remain subdued, with eagerly awaited half-year data expected to shed more light on the economic trajectory in the coming months. While acknowledging that global economic challenges are prevalent, it's pertinent to note that certain offshore investment portfolios offer more promising growth prospects compared to the local bourse. Ultimately we are purely looking at it from a financial perspective in order to find value for investors.

Our stance emphasizes the importance of a well-diversified investment portfolio for achieving stable growth. By incorporating different asset classes, investors can mitigate risk and optimize returns. As part of this strategy, you should be invested in offshore stocks as well as we have certain limits in which we can move into. A tailored approach to investing, focusing on specialized sectors or regions, can further enhance portfolio performance.

For detailed information and financial advice, you should speak to your financial planner or investment specialist.

Your financial planning partner.


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