We hope you all had a wonderful festive season and your 2019 has got off to a great start! We wish you prosperity, health and happiness for 2019.

Our reporting structure to clients is changing and as a result, your monthly reporting will now be sent to you quarterly. This will be done to reduce the administration, in particular the reliance on paper and the effect this has on the environment. It will also give us the opportunity to see you more, which is what we want to focus on.

If you would like supplementary reports during the quarter, we will be able to give you online access to the underlying institution with whom you are invested. Should you wish to discuss this further, kindly contact your relationship consultant.

From a compliance point of view, we are obligated to roll-out new safe guards for Common Reporting Standards (CRS), as well as Anti-Money Laundering (AML) legislation and you may have already been asked to update information. This is an on-going requirement and we may have to request additional information from time to time. Your understanding and co-operation in this regard is greatly appreciated.

Moving on to the markets, the South African financial year end saw a protracted low return environment that has caused even the most hardened investor some concern. However, the first two months of this year has seen a slightly more upbeat tone, with global and local markets returning to a more positive theme. In all our Blue-Chip recommendations, the balance sheets and cash flows are strong and we have a more optimistic outlook on not only the South African economy but the global economy as a whole.

Despite the change of leadership within the ANC to a more market friendly leader, Cyril Ramaphosa, the Zuma effect has lingered and we have seen very average growth rates from some of our favourite companies. Coupled with this, the sell off at the end of last year resulted in the lows of the year being reached around December.

In spite of this, one needs to take a step back and look at the exceptional difference in the state of affairs when compared with a year ago, after the exit of the Jacob Zuma faction and the introduction of Cyril Ramaphosa and what hopefully turns out to be an anti-corruption drive.

The political situation, given that this is now an election year, will see an increase in political noise that may cause our Rand to perform negatively against the international currencies. The recent horrific disclosures on the extensive corruption under the Zuma regime, have not only rocked local but also international investors. Cyril Ramaphosa and his new team will have to work very hard to stave off any rating agencies downgrades. After the 8th May 2019 elections, we may see some positive development in terms of attitude to our local business environment.

The corruption in our state-owned enterprises (SOE’s) and the massive bail outs awarded to Eskom, SAA and other state-owned entities, has been a matter of grave concern to all, although, under Pravin Gordhan the situation may improve in the short term. Talk of privatization and the splitting up of SOE’s can also be seen favourably from an investment point of view. Despite these positives, there is still the risk of expropriation of land without compensation, but it is unlikely that any developments will take place in this area until after the elections.

Globally, the quarter saw negative markets in the run up to the festive season, as the trade war between the US and China along with Brexit dominated the headlines. This year, Brexit continues to linger and the United Kingdom politicians are unable to make even the simplest of decisions. This has caused anxiety in the local United Kingdom market as politicians struggle to find some common ground in order to confidently progress towards Brexit.

In the United States, Trump’s U-turn on his sanctions and trade war with China has seen global markets recovering and one would hope that they patch up these relations and focus on inclusive growth as opposed to the threat of escalating any of these trade wars.

Once again, we believe that equities, particularly at the moment, offer long-term value and are an excellent asset class for long term wealth creation.

May we take this opportunity to thank you for your continued support and your assistance with the ever changing FICA requirements.

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