Wealth World
R O WA N & H E AT H E R R A AT H
FINANCIAL PLANNING CONSULTANTS CO
DEC 2008 - JAN 2009
2010: A Boost for Tourism
A NEWSLETTER FOR OUR VALUED CLIENTS
The 2010 World Cup is set to contribute R55 billion to the SA economy and create 415,000 new jobs, according to a recent study by Grant Thornton Strategic Solutions. The contribution to SA’s GDP is made up of the R33bn in direct spending on stadiums and infrastructure, the spectator trip expenditure of R8bn, ticket sales of R6bn, and sponsorship deals of R750m. The expected tax income to government is around R19bn. However, “the biggest benefit is going to be in tourism,” says Gillian Saunders, a Director at Grant Thornton Strategic Solutions. “South Africa is conducting the right sort of marketing abroad, and can look forward to a fantastic tourism impact.”
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Use it wisely!
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Inflation and high interest rates have been eating up available income, which has made it difficult for many of us to survive the strain of unexpected expenses. As a rule, you should pay off highinterest debt, like overdrafts and credit cards, before investing. To avoid going into debt in future, always a possibility in these times of uncertainty, you should be building up an emergency savings account for a rainy day.
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About 480,000 foreigners are expected to travel to South Africa for the World Cup. In addition, as many as 40 billion TV viewers from around the world will be watching!
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If you do have disposable income you should consider putting money into a diversified investment, that includes exposure to the stock market (equities). With share prices at their lowest levels in many years, the stock market is offering great buying opportunities, especially for long-term investors, to build a strong wealth portfolio.
(Courtesy of www.sagoodnews.co.za)
What happened in 2008?
Aids:
Finally, an end to the madness. Barbara Hogan' appointment as s Health Minister was the first of hopefully many responsible decisions by the new ANC leadership.
Mbeki:
A graceful departure, emphasising the maturity of our democracy.
Nelson Mandela:
90 years old, and still the number one statesman on the planet.
Oil:
Prices were pushed too high by hedge funds speculating and then pushed too low as they had to reverse out of these positions.
President Obama:
He will be good for Africa because he has an interest, and because he is likely to take a firm stance.
Bank Aid:
Bailout bills to save the world. The equivalent of £288 for every man, woman and child on the planet.
Q3 2008:
The worst quarter for world markets since 1929. Worse than most people have ever seen, and hopefully the worst investors will ever see in this lifetime.
Moving from Wall Street to Main Street. The markets have taken their pain; now it' the turn of the economy. SA will be better off s than the developed world, but not immune.
Credit crunch:
Derivatives:
Rand:
Sold off heavily as investor sentiment towards emerging markets soured. Expect the rand to regain some of its stature during 2009 as sentiment recovers.
Taken and abused as gambling instruments betting on future prices. Annual trade up from $1 billion in the early 80s to $1000 trillion last year. Only 2% of monetary transactions last year involved actual goods and services. Hardly surprising it all ended in tears.
Springbok:
Whether you are pro or not, it' a globally recognised brand and a s powerful one at that. Adopting the Protea but retaining the Springbok may be the ideal solution to a complex and emotional issue.
Desperately needs fixing. SA' chances of future success hinge s almost entirely on an educated youth. Hopefully the new ANC leadership can reverse this decline.
Education:
After being neglected for so long, cash, bonds and fixed income products are back in vogue. In a wild world, a predictable, stable return is better than nothing.
Fixed income:
Trevor Manuel:
Spooked markets with talk of resignation. At 12 years, he is the world' longest serving finance minister, but at some stage he will s want to go. Allow him his freedom; there' lots of talent in Treasury. s Ironically, markets also collapsed when he was appointed.
Lots of talk about a global recession. The US, UK, Europe and Japan may well already be in recession. Asia will not see a recession and neither will we. Expect roughly 3% growth in SA this year and 1.5% - 2% next year.
Growth:
US consumer:
Grappling with recession, retrenchments, falling house prices and excessive levels of debt. Expect stimulus packages and infrastructure spend to boost jobs and the economy.
Hedge funds:
Many investors have paid a significant price for not understanding what their hedge funds actually did.
Volatility:
We' seen the worst. Interestingly, SA investors, more used to ve volatility than global investors, appear to be better diversified and a lot less panicky than developed world investors, for whom extreme volatility is unusual.
Inflation and interest rates:
Food and petrol prices are falling, and inflation should decline quite rapidly next year. Rate cuts of around 3% are expected in 2009, bringing relief to consumers.
World cup 2010:
All seems on track, despite numerous pessimistic predictions in the beginning. Sure it' going to cost more; these events always do. s
JSE:
A tough year was inevitable after 5 great years. Fallen in line with global markets and hit hard because of our large commodity component. Probably taken most of its pain, with a broad-based recovery likely during 2009.
Xenophobia:
Reared its ugly head. Not acceptable. Has been contained so far.
Kgalema Motlanthe: Lekota / Shilowa:
As interim president, we couldn'have hoped for better. t
Yes, we can:
The new 3-word slogan of America. Interesting times indeed.
Good for democracy; will put the constitution firmly out of temptation' s reach for any political party.
(Adapted from “The A-Z of investing in 2009” Jeremy Gardiner, Investec)
Zimbabwe:
The world' lowest growth, highest inflation, shortest life s expectancy. Fix Zimbabwe and then the rest of Sub-Saharan Africa looks great as an investment destination.
Did you know?
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The “Doing Business” 2009 annual report released by the World Bank at the end of November 2008, provides a global ranking of 181economies on key business regulations and reforms. In other categories, South Africa ranked:
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sun shines on Africa
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Indian company, Editia Perla, is to invest up to US$500 million in a project in Egypt to produce the silicon cells needed to generate energy from the sun. Egypt is also building a 200MW Red Sea wind farm, using a US$388 million loan from a German commercial bank and the European Investment Bank. In January, Libya starts construction of a US$5 billion energy hub called ‘Smart Energy City’. Tunisia is to build two wind farms in Bizerte Province to generate 400000MW, financed by a US$250 million loan from the Spanish government. In Nigeria, China’s Shenzhen Energy Group is planning to build a 3000MW power plant at an estimated cost of US$2.4 billion. Brazil is to finance the US$555 million construction of Ghana’s Jule River and Puralugu hydro power plants, to supply 3500MW by 2013. Ghana’s government is also investing US$400 million to develop thermal power generation and China’s Exim Bank is to finance the US$600 million development of the Bui hydro project. In Zambia, China’s Sino Hydro is to spend US$400 million to expand the Kariba North Bank power station – helping mines on the Copperbelt to reach full potential.
3rd
Easiest countries to get
credit
Laws to protect
9th
investors
Most business friendly
32nd
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regulations
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We would like to
thank you
for your support during 2008
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We wish you and your loved ones a
holiday season
peaceful & happy
Please note that we will be on leave from 16 December 2008 to 4 January 2009
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ROWAN RAATH
082 464 2438 rowan.raath@liblink.co.za
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HEATHER RAATH
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083 276 8709 heather.raath@liblink.co.za