SENATE CONFERENCE 2013
SASFIN WEALTH
• As a division of the Sasfin Group,
Sasfin Wealth has for over 120
years been providing trusted
advice and ...
FOOTPRINT
Hong Kong
Pretoria
Johannesburg
Bloemfontein

Durban

Port Elizabeth

Cape Town
George
Investment team
Investment Process
Competitive advantage
•
•
•
•
•

Experienced investment team
Superior ability to read markets
Adaptive investment style
Hi...
Awards
2012: Raging Bull
broad-based Domestic Equity Fund on a straight performance basis, being the
• Best with the highe...
Sasfin Securities
• Our heritage dates back to 1890 when Otto Pollock became a
member of the JSE.
• Today we have in exces...
We identified 6 traits which are non-negotiable when it comes
to successful investment management.

•

•

•

•
•

•

Relat...
Offering
•
•
•
•
•

Full Discretion: Sasfin assumes full responsibility for the management of the
underlying portfolio.
Re...
Foundation Portfolios
• Foundation Fund Fact Sheets
• Client proposal
Our offering is available through:
•
•
•
•

Glacier & Glacier International (Sanlam)
Investec
Momentum
Old Mutual Internat...
Thank You
DISCLAIMER
•
•
•

This presentation has been compiled by Sasfin Financial Advisory Services (Pty) Ltd - Co. No.1997/010819...
World Markets

Balancing the risks
Shut happens!


Past few weeks underscored by the debt ceiling debate,
improving economic numbers and talk of tapering

...
US economy – chugging along


Employment rising
24 months of successive job increases
Oct job numbers well ahead of conse...
S&P500
1990 - 2000
Tech revolution
Globalisation
Cell phone
Internet

2000 - 2010
GFC (Collapse of Lehman)
China emerges
9...
What the Frack ?
Hydraulic Fracturing

24
The Natural Gas Revolution
 Fracking has allowed energy companies to dig deeper than
before unlocking unconventional oil ...
The Natural Gas Revolution
 Fracking has produced an abundance of inexpensive natural gas

 Natural gas used to power sh...
Global Economy
Size of economy
US

21.6%

China

10.4%

EU

26%

Japan

8.4%

Brazil

3.6%

UK

3.5%

Russia

2.6%

Est. g...
Europe’s deficit problem

28
Europe: signs of economic recovery are visible


Recovery still fragile – deflation becoming the biggest danger



Euro ...
UK: economy accelerates to fastest growth since 2010


UK economy growing at its fastest rate in 6 years



Unemployment...
Japan: “Abenomics” a mix designed to jolt the economy

CPI
Japan’s economy will remain on track as the
government prepares...
Electrifying a nation that had lost faith in its political class

Nikkei
Japan’s economy recovering at moderate pace
despi...
Emerging Markets continue to disappoint


China grows at the slowest pace in 13 years



Indian Rupee falls to record lo...
S&P500 vs MSCI Emerging Markets Index
Emerging Markets
Developed Markets

“Investors looking for
emerging market-like grow...
China’s tectonic shift – the dawn of a new era


New regime acting more carefully, balancing growth, shifting
from a prod...
China’s growing middle class is demanding more
Western brands sell a lifestyle / image aiming
to attract the aspirant Chin...
South Africa


Widespread labour unrest disrupting mining and manufacturing output



Falling commodity prices putting p...
JSE trading at all time highs
Breakdown of the JSE: +23% from 1st Nov 2012
The top 15 companies make up over 70% of the JSE (12 month return)
Market cap...
Local Investment Ideas: Stick with the winners
Companies expanding offshore into high growth regions
Naspers, Aspen, Bidve...
JSE is more of a convenience store than a supermarket

JSE

Global Markets

41
Create a champions league portfolio

JSE

Global Markets

42
A guideline to our team’s offshore investment ideas

Escalating prosperity in developing nations
LVMH, Daimler, Prada, BMW...
Thank You

David Shapiro

Kavita Patel

Craig Diesel

Carmen Solomons

Deputy Chairman / Director
david.shapiro@sasfin.com...
Sasfin Securities; Balancing the risks & global economic outlook; Nov 2013
Sasfin Securities; Balancing the risks & global economic outlook; Nov 2013
Sasfin Securities; Balancing the risks & global economic outlook; Nov 2013
Sasfin Securities; Balancing the risks & global economic outlook; Nov 2013
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Sasfin Securities; Balancing the risks & global economic outlook; Nov 2013

  1. 1. SENATE CONFERENCE 2013
  2. 2. SASFIN WEALTH • As a division of the Sasfin Group, Sasfin Wealth has for over 120 years been providing trusted advice and wealth management solutions. • We have a national presence and consult to and manage in excess of R70 billion.
  3. 3. FOOTPRINT Hong Kong Pretoria Johannesburg Bloemfontein Durban Port Elizabeth Cape Town George
  4. 4. Investment team
  5. 5. Investment Process
  6. 6. Competitive advantage • • • • • Experienced investment team Superior ability to read markets Adaptive investment style High conviction We optimise risk adjusted returns by consistently adding increments of return
  7. 7. Awards 2012: Raging Bull broad-based Domestic Equity Fund on a straight performance basis, being the • Best with the highest Profile Data total investment return ranking over three years in fund the ASISA Domestic Equity General, Value and Growth sectors 2012: Raging Bull • Best Domestic Equity Value Fund
  8. 8. Sasfin Securities • Our heritage dates back to 1890 when Otto Pollock became a member of the JSE. • Today we have in excess of R60 billion of assets under administration which makes us one of the largest and most experienced private client stockbroking businesses in South Africa. • We pride ourselves on our ability to offer truly bespoke investment solutions both locally and internationally, coupled with uncompromising levels of client support.
  9. 9. We identified 6 traits which are non-negotiable when it comes to successful investment management. • • • • • • Relationship: The successful investor interacts and builds a sound relationship with an investment professional that truly understand their needs and carefully manages the emotional aspects of investing. Independence: The successful investor chooses an advisor whose independence is unconstrained by investment bias. Trust: The successful investor invests with a wealth management company who they can trust – an entity that has a solid reputation and extensive history of successful wealth management. Expertise: The successful investor entrusts their wealth to capable and astute professionals who have the ability to navigate through difficult market cycles. Simplicity: The successful investor has a clear understanding of their portfolio and related fees. They steer clearfrom opaque investment products that aren’t fully understood. Global: The successful investor requires a globally diversified portfolio which is managed locally.
  10. 10. Offering • • • • • Full Discretion: Sasfin assumes full responsibility for the management of the underlying portfolio. Referral managed: Sasfin advises on the underlying securities while the client is ultimately the decision maker. Deal & Execution: Our clients will be required to formulate and implement their own investment strategy. Offshore: Our global trading platforms and international research allow us to think globally while executing locally. Personalised share portfolio: We manage your client’s compulsory and voluntary money in a tax effective manner.
  11. 11. Foundation Portfolios • Foundation Fund Fact Sheets • Client proposal
  12. 12. Our offering is available through: • • • • Glacier & Glacier International (Sanlam) Investec Momentum Old Mutual International.
  13. 13. Thank You
  14. 14. DISCLAIMER • • • This presentation has been compiled by Sasfin Financial Advisory Services (Pty) Ltd - Co. No.1997/010819/07; a licensed Financial Services Provider - FSP No. 5711 (use the one or other as appropriate) Sasfin Asset Managers (Pty) Ltd - Co. No. 2007/018275/07; a licensed Financial Services Provider - FSP No. 21664 in the context of the services it provides. The contents are proprietary and may not be copied or disclosed without consent. Information and opinions are general and subjective in nature and do not constitute advice. Any references to historical data, assumptions, targets, benchmarks or examples are as indicators / illustrations only and are not fixed or guaranteed. Past investment performance is not necessarily indicative of future performance. While care is taken to provide current and accurate information, no liability is accepted for errors, omissions or subsequent changes and this presentation remains subject to revision, verification and amendment without notice and without liability to compensate or reimburse any party. Anyone acting on this presentation before taking appropriate advice does so at their own risk
  15. 15. World Markets Balancing the risks
  16. 16. Shut happens!  Past few weeks underscored by the debt ceiling debate, improving economic numbers and talk of tapering  Tea Party echoing same thinking Republican moderates have expressed for years, except at higher volume Abhorrence of ObamaCare, loathing of government, faith in tax cuts and free market etc.  Tactics nearly forced US default  Caused grievous harm to Republican brand – 53% of Americans blamed Republicans versus 29% Obama  Damaged Republicans’ business leaning image  Sequester lowered growth – Grand Bargain on spending cuts sought  Shutdown and debt ceiling protests hurt business confidence – cost of shutdown estimated at $24bn  Tapering delay until there is clear evidence that the economic recovery is on a sustainable path 20
  17. 17. US economy – chugging along  Employment rising 24 months of successive job increases Oct job numbers well ahead of consensus  Housing recovering New houses sold double 2011 lows  Retail spending improving Above pre-crash levels  Trade balance shrinking Half ‘08 highs of -$70bn  Budget deficit falling An increased level of tax receipts and lower government spending  Oil & gas production exploding US fastest growing producer in 2012 lifting output by 1m barrels per day to 8.9m  Lower birth rate projections, aging work force and slowing productivity Gains likely to reduce GDP to 1.9% between 2012 and 2032 from post-war average of 3.5% 21
  18. 18. S&P500 1990 - 2000 Tech revolution Globalisation Cell phone Internet 2000 - 2010 GFC (Collapse of Lehman) China emerges 9/11 crisis 2010 - 2020 End of commodity super cycle Shale, oil, gas revolution IT & communication transformation 3D printing, big data Aging demographics: US, Japan, China, Europe 22
  19. 19. What the Frack ?
  20. 20. Hydraulic Fracturing 24
  21. 21. The Natural Gas Revolution  Fracking has allowed energy companies to dig deeper than before unlocking unconventional oil deposits Crude Oil net Imports  North America has largest stores of unconventional oil 50% more than total conventional crude in the Middle East  US could overtake Saudi Arabia as the world’s largest oil producer by 2020 Crude Oil net Exports  Making it less dependent on oil from foreign nations whose interests conflict with theirs  Imports are down to 40% from 60% in 2005 25
  22. 22. The Natural Gas Revolution  Fracking has produced an abundance of inexpensive natural gas  Natural gas used to power ships, trains, heavy goods vehicles and power stations  Natural gas power stations have half the emissions of conventional BNSF carry 650k barrels coal plants a day, soon to increase to Emissions fallen 12% since 2007 on conversions 750k barrels a day, will  Boom in oil and gas drilling creating jobs in states hard hit by recession eventually reach over 1m barrels a day  Cheaper energy input costs attracting manufacturing back to the US 1m manufacturing jobs could be added by 2025  Plentiful oil will diminish incentives to reduce reliance on fossil fuels 26
  23. 23. Global Economy Size of economy US 21.6% China 10.4% EU 26% Japan 8.4% Brazil 3.6% UK 3.5% Russia 2.6% Est. growth 2014 China 8.2% India 6.2% Russia 3.8% Brazil 4% US 3% Australia 3% UK 1.5% Europe 1.1% World 4.00% Emerging Regions 5.70% Advanced Economies 2.20%
  24. 24. Europe’s deficit problem 28
  25. 25. Europe: signs of economic recovery are visible  Recovery still fragile – deflation becoming the biggest danger  Euro zone expected to expand by 1.2% Forecast growth for 2014 at 0.5% Short of the pace needed to head off deflation & address the on-going debt crisis  Germany and France slowing but Italy and Spain performing better  Spain, Italy & Portugal also showing economic gains Spain out of recession, growing at 0.1% in Q3  EU needs to increase growth potential, enhance job creation & boost European competitiveness  The origins of the disaster lies with excessive private borrowing  Euro zone blighted Greece got into trouble because its government spent too much anddebt even more thanby private Govt debt collected too little in taxes  The bust followed a private sector binge: mortgage debt in Ireland and Spain, corporate borrowing in Portugal and Spain  Without growth, zombie firms are unable to invest or grow Much like those wafting through Japan in the 1990s 29
  26. 26. UK: economy accelerates to fastest growth since 2010  UK economy growing at its fastest rate in 6 years  Unemployment at 3 year low  Recovery beginning to take hold  2013 growth upgraded to 1.6% from 1.4%  Forecast growth 2.8% for 2014  Interest rates could begin rising sometime in 2015, once employment falls to 7%  “The economy is growing robustly as lifting uncertainty & thawing credit conditions start to unlock pent up demand” Mark Carney Governor BOE / Chairman MPC Unlikely that the recovery will fade significantly: - Revival of the British housing market - Youth unemployment falling - Confidence returning - Obstacles home and abroad remain 30
  27. 27. Japan: “Abenomics” a mix designed to jolt the economy CPI Japan’s economy will remain on track as the government prepares a 5 trillion yen ($50.6bn) stimulus package to offset the drag from a sales tax increase scheduled for next April. Economists expect the majority of the stimulus package to be spent on infrastructure and tax breaks for the corporate sector. Reuters 31
  28. 28. Electrifying a nation that had lost faith in its political class Nikkei Japan’s economy recovering at moderate pace despite slowing exports Imports likely to remain strong due to solid domestic demand, while business sentiment is improving
  29. 29. Emerging Markets continue to disappoint  China grows at the slowest pace in 13 years  Indian Rupee falls to record lows – rates rising to stem outflows  Brazil’s fundamentals deteriorate on incoherent economic policy  Russia down on falling energy prices and tight corporate credit  Investors continue to withdraw from emerging markets even in the face of Fed tapering talk 33
  30. 30. S&P500 vs MSCI Emerging Markets Index Emerging Markets Developed Markets “Investors looking for emerging market-like growth rates should look to the US” Meredith Whitney
  31. 31. China’s tectonic shift – the dawn of a new era  New regime acting more carefully, balancing growth, shifting from a production oriented economy to one centred around household consumption  Third Plenum: Supported land reform, fiscal reform and judicial system Disappointed on financial liberalisation, one-child policy & residency reform   Demand slowly recovering, expect growth around 7.5% Structural reforms designed to improve the supply side of the • economy  Reforms would help sustain the growth of productive capacity, • improving the allocation of capital and labour  Cutting red tape and other regulatory barriers to entry would help private firms invest in industries now dominated by state- • owned enterprises Consumption expected to overtake investment as the largest contributor to GDP Investment 42% (2010 – 2020) 34% (2020 – 2030) 41% (2010 – 2020) 51% (2020 – 2030) + 24% Household consumption accounts for 38% of GDP (US ~70%) World’s largest car market, 19.3m cars sold in 2012 • Largest internet market in the world • Reduced the per-watt cost of solar power from over $3 (2008) to under $1 (2011) Consumption - 23% Home to 20% of the world’s population
  32. 32. China’s growing middle class is demanding more Western brands sell a lifestyle / image aiming to attract the aspirant Chinese consumer McDonalds Haagan-Dazs Nike Adidas Starbucks Paul Frank
  33. 33. South Africa  Widespread labour unrest disrupting mining and manufacturing output  Falling commodity prices putting pressure on mine earnings  Rising input costs, electricity constraints, squeezing manufacturing margins  Slowdown in household spending  Continued shift in fiscal policy to social spending from infrastructure  Corruption, poor skills, inefficiency WEC ranks SA’s education system 146 out of 148 countries and last in Maths & Science  Hesitant domestic and foreign investor confidence  Pessimism about the long term outlook for the economy  Debt downgrade possible if deficits continue to deteriorate 37
  34. 34. JSE trading at all time highs
  35. 35. Breakdown of the JSE: +23% from 1st Nov 2012 The top 15 companies make up over 70% of the JSE (12 month return) Market cap (ZAR) 1.1 tr British Am Tobacco 25% SABMiller 859 bn Billiton 655 bn Richemont 536 bn Naspers 385 bn 69% MTN 368 bn 29% Anglo American 335 bn -11% Sasol 328 bn 37% Standard Bank 203 bn 19% Firstrand 202 bn 29% 41% 12% 85% Vodacom 172 bn 158 bn 137 bn 129 bn Pick ‘n Pay 23bn Telkom 14bn Adcock 12bn JD Group -21% Barclarys Market Cap 36% Kumba Iron Ore Market cap: R714bn 9% Old Mutual Xstrata/Glencore 7bn 9% 124 bn 75% Aspen 0 200000 400000 600000 800000 1000000 1200000
  36. 36. Local Investment Ideas: Stick with the winners Companies expanding offshore into high growth regions Naspers, Aspen, Bidvest, BHP Billiton, Sasol, Glencore Emerging market consumption growth SABMiller, British American Tobacco, Richemont Superior retail business models continue to hold Famous Brands, Woolworths, Mr Price Expansion into Africa Imperial, MTN, Omnia, Shoprite Expanding middle class exploring medicare options Life Healthcare, Mediclinic, Discovery 40
  37. 37. JSE is more of a convenience store than a supermarket JSE Global Markets 41
  38. 38. Create a champions league portfolio JSE Global Markets 42
  39. 39. A guideline to our team’s offshore investment ideas Escalating prosperity in developing nations LVMH, Daimler, Prada, BMW Increasing urbanisation L’Oreal, Altria, Anheuser-Busch InBev Competitive companies focusing on the consumer Nestle, Unilever, Adidas, J&J High yield in a low yielding environment Royal Dutch Shell, AstraZeneca, Sanofi, Allianz, Vodafone America: The next emerging market General Electric, Wells Fargo, JPMorgan, Berkshire Hathaway IT: Tech players transforming our lives Google, Amazon, Microsoft 43
  40. 40. Thank You David Shapiro Kavita Patel Craig Diesel Carmen Solomons Deputy Chairman / Director david.shapiro@sasfin.com Portfolio Manager kavita.patel@sasfin.com Portfolio Manager craig.diesel@sasfin.com Portfolio Assistant 44 carmen.solomons@sasfin.com

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