The quarter ending 31st May 2017 has seen a recovery in the overall All Share Index, despite the negative head winds caused by Jacob Zuma’s tenure as President. This has resulted in local confidence, as well as International confidence diminishing and has created a significant amount of instability in the political arena, both within the ANC and in corporate South Africa. Coupled with the firing of Pravin Gordhan, the appointment of Mr. Gigaba, as well as a number of other political appointments, links to a state of capture.
In spite of this, the Rand has been amongst the best performing emerging market currencies and inflows have been seen in to our bond market. We managed to avoid a down grade by Moody’s and as interest rates were kept on hold, International investors have been returning to the South African market, despite the risk, in order to achieve higher yields on deposit.
Internationally, President Trump creates sensationalist headlines almost daily, particularly in view of his relationship with the Russians and the fall out with the FBI. Again, notwithstanding the political state of affairs, the United States markets have performed well and as a result, commodity/resource backed economies are benefitting. A financially healthy United States is good for all global markets as can be seen from the recent highs. In Europe the bourses remain close to all-time highs and in particular the FTSE100, which regardless of a weak Pound, has performed well during the course of this quarter.
In the United Kingdom, Theresa May has brought the elections forward and this has been a very shrewd political move as she aims to get the required number of seats in parliament to enact her further withdrawal from the EU. It is a tricky time for the balance of Europe, as a number of these economic zones are questioning their association with the EU.
The oil price continues to be depressed as a result of the over-supply globally. Although the Russians and the Saudi Arabians have entered into discussions to reduce output, it remains to be seen as to whether or not this will have an effect on this oil price.
From a compliance point of view, as well as a tax point of view, we have seen significant changes to the trust tax landscape and this has impacted a number of clients in terms of deemed interest on any loans to trusts.
Common Reporting Standards (CRS) continues to be rolled out aggressively and all clients’ local and International accounts are subject to scrutiny and disclosures to the relevant tax authorities.
As a point of interest, we have recently established a relationship with Graham Dinkelman who is able to provide quality advice in long term insurance and we would encourage all clients to review these regularly. Please let us know if we can assist in this regard.