The last quarter under review saw continued increases in interest rates by central banks, in order to combat the rampantly high inflation environment globally. In South Africa, inflation seems to be on a downward trend while internationally it still remains stubbornly high. Although elevated interest rates are good for people seeking income, it puts the general consumer under pressure.  This is most likely the reason central banks have become more dovish when referencing further interest rate increases.

As a direct result of this, global property markets have cooled as higher interest rates mean higher mortgage repayments. A rapidly increasing interest rate environment causes debt repayments to increase significantly, particularly in areas that previously had low interest rate environments for some time, resulting in less disposable income and ultimately leading to a decrease in spending by consumers.

In South Africa, the weakened Rand and high inflation coupled with the continued power interruptions, has added to growing negativity, reduced manufacturing output and a further lack of business confidence. Despite the above headwinds, the quarterly index measuring consumer sentiment improved during the quarter from the previous quarters, combined with a moderation of inflation especially in food prices, this should hopefully improve retail sales volumes going forward as lower inflation results in increased purchasing power of consumers.

During winter, the Electricity Minister authorized the use of diesel to keep the power grids stable and there are serious doubts about the ongoing sustainability of the grid, given that very little maintenance is taking place and load shedding is being increased to alleviate demand. The use of diesel is prohibitively expensive and should not be seen as a viable long-term solution.

The BEE and affirmative action rollout, has become particularly onerous for large businesses and combined with the unemployment crisis, it remains to be seen whether or not these policies are ever able to create employment.

The Chinese economy is experiencing a low growth environment resulting in the Chinese central bank providing stimulus by cutting rates in order to attempt to alleviate international investor’s concerns. This, coupled with the continued escalation of tensions between the United States and China over technology chips which has seen a tit-for-tat where certain Chinese companies are no longer allowed to do business in the United States, and similarly, China has done the same to some United States companies operating in China. One seriously hopes for moderation in these relationships, but given the Chinese/Russia association and the backing provided by China towards Russia, it remains to be seen whether or not this can be de-escalated.

It must also be remembered, that at this time of year markets are subject to pull-backs, so it is of the utmost importance that investors take a long-term view and stay invested.

Below is a breakdown of how the International Bourses have fared:

The below graph tracks the performance of the Rand against the US Dollar over a seven year period:

The below graphs track the performance of the JSE All Share Index over a seven year period:  


The recent BRICS summit, which has been touted as a success by the ANC, may have the unintended consequence of further alienating us from the West as there are serious concerns around South Africa’s grey listing and alignment with Russia and China. Grey listing has also caused a significant amount of local and international regulatory compliance with the implementation of UBO (Ultimate Beneficial Ownership) on Trusts, Companies, Estates and Curatorship’s and added to an already burdensome compliance environment.

As a result of grey listing, the Masters office and SARS have made it compulsory for all Trusts to upload detailed information regarding the “ultimate beneficiaries” associated with the respective Trusts.  This includes settlors, trustees, beneficiary’s identities and their tax information.

At Ewing’s, we have been engaging with the Chief Master to get clarity on the safety, security and safe custodianship of this confidential information, as under the Protection of Personal Information Act we have a responsibility to protect our client’s information.  Unfortunately, to date, we have had no reply to numerous enquiries made to the Master’s Office regarding the security of their newly implemented system.  We will provide feedback to clients as soon as we have further clarity on this matter.

Thank you for uploading your documents