The quarter ending 30 November 2018 has seen negative sentiment towards emerging markets continue with the Johannesburg Stock Exchange (JSE) settling at the end of the month on 50,663. South Africa Incorporated has experienced four years of little or no capital growth under the leadership of President Zuma and as a result of the recent global pullback, shareholders have felt this negativity persist.
During this time, we have also seen the cost of living increase and understandably, investors have been concerned about this performance. However, after the recent global correction, Ewing Trust Company is of a view that equities are offering good value and trading at levels last seen during the 2008 financial crisis. We believe the JSE currently provides opportunity and being associated with general equity, our favourite Blue Chip stocks will provide solid capital and strong dividend growth going forward.
The political situation, given the fact that we are heading up to elections in May 2019, will undoubtedly cause upheaval and the rhetoric will increase in the run up to these elections. However, in our economy, there are the beginnings of positive growth under Cyril Ramaphosa’s leadership which has resulted in much improved oversight, particularly under Pravin Gordhan with his strict focus on State-Owned Entities that were exposed to serious corruption under Jacob Zuma. One would hope that this positive momentum continues and those guilty of corruption are brought to book.
We are currently experiencing a vastly different state of affairs compared to a year ago when the balance of power in South Africa looked to be very much in Jacob Zuma’s favour. On a positive note, what Cyril Ramaphosa has managed to achieve in a very short space of time is remarkable. Obviously, the expropriation of land without compensation discussion will continue to cause uncertainty. Despite this, there seems to be an increase in investor and business confidence under the current political regime.
Globally, negative sentiments have prevailed as a direct result of the trade war between the United States and China due to Donald Trump’s policies. This, coupled with the decline in technology stocks which have to date been a significant growth area in global markets, has had a knock-on effect with all global Bourses experiencing a downturn. Any escalation in the trade war between the United States and China could result in great volatility and one would hope that Donald Trump relaxes some of the proposed tariffs.
In the United Kingdom the Brexit issue continues to linger, although Theresa May has made headway with the European Union. It now remains to be seen whether or not she has the support from within the United Kingdom. Coupled with the retraction in global markets, the resources and oil stocks have also retraced during the period under review.
From a compliance point of view, we have seen an enhanced roll-out of Anti-Money Laundering (AML) legislation. This is a new legislation that governs all Financial Service Providers (FSP) and at Ewing Trust Company, we have implemented a number of enhancements to cater for these regulatory requirements in order to safeguard both clients and the business from exposure to any illegal activities. We are lucky to know all of our clients and investment family on a face to face basis, so we are ahead of the curve in terms of compliance with these Acts which should allow us to role this new requirement out seamlessly.
Although we have already collected our clients’ information, please bear with us as we aim to update any information in order to comply with these ongoing requirements. Furthermore, the new legislation also requires us to identify and record source of funds for any deposits of R25000 or more. Should your information change, kindly inform your relationship consultant accordingly.
Despite all of the above negativity, as a Company we believe that this is one of the best opportunities in our investment careers to be associated with quality stocks at depressed values and we retain our long-term investment view by staying invested in Blue Chip stocks which will provide positive returns into the future.
It is with mixed emotions that we say a very fond farewell and thank you to Chris Lees, who has been part of the Ewing group of companies for more than 28 (and a half) years. Chris has been a wonderful role model as a colleague and friend, and very much part of the investment family. We would like to take this opportunity of thanking Chris for her loyal service, contributions and for what she has meant to both colleagues and clients.
Our offices will be closed from Friday, 21 December 2018 and will re-open on Wednesday, 2 January 2019. In the event of an emergency, please contact one of the Directors on the following mobile phone numbers
Iain Ewing: 082 459 2812 Gareth Collingwood: 083 467 7891 Angela Klynhans: 083 296 9010
We take this opportunity to wish all of our investment family a happy, blessed and safe festive season.