May 26, 2021
So far 2021 has brought much hope to us all, after a very difficult 2020. Globally, equity markets have rebounded, vaccine rollouts have gained momentum and economies are showing some green shoots. The global equity market is up 9.1% in US dollars so far this year, SA equities have gained 14.2% in rand and predictions for world growth are now on average 6% versus -3.3% the previous year*. The recovery has been marked by demand for platinum group metals in particular, and we’re excited to share the perspective of our 4Factor team in an article about the Resources sector in this issue.
2020 will undoubtedly make its mark in history books, but the strongest message is one of hope. Nelson Mandela described hope so much better than I could: ‘Hope is a powerful weapon and no one on earth can deprive you of (it)’. I believe it is hope, together with humanity, that got us all through the past year and is likely to be what propels us further.
Looking ahead and having conviction in the opportunities they identify to invest for better outcomes for you over the long term is what drives our investment team. In this issue of the newsletter, our fixed income team delve into the reasons for extraordinary recovery of the rand, consider the risks to its strength and the outlook for the domestic bond market. The drive towards net zero will affect the full spectrum of commodities, and our 4Factor team delves into how it will impact platinum group metals in particular. They also look at the equity opportunities presented by a more resilient than expected SA consumer.
2021 is a milestone year for our firm. Not only do we celebrate our first anniversary as an independently listed investment manager, but also our thirtieth year as a firm. Importantly, I would like to thank our loyal South African clients who have stood by us as we navigated various market cycles and expanded our footprint globally. We are excited and look forward to our journey with you for the next 30 years. To quote our CEO, Hendrik du Toit, “This is just the start. We are not thirty years old. We are thirty years young. And there is so much yet to come.”
COVID-19 has taught all of us the significance of collaboration. The outcome would appropriately be described by another Nelson Mandela quote: “It always seems impossible, until it is done.” We at Ninety One took on what we also thought was impossible at times in starting our business three decades ago and expanding beyond our African roots. Ultimately, we believe this has benefitted our clients in that we are today a well-diversified business, able to ensure we follow global best practice in all that we do. Being a global business with African roots has also allowed us to attract exceptional talent. Look out for an interview with Esther Chan in this issue, another one of those gifted people we’re proud to call a colleague.
Our journey has taught us to see the world differently, to recognise and embrace change and uncertainty. We are always navigating a world of change, seeking the best outcomes for you, our clients, our company, and the world in which we live. On the latter point, I would like to leave you with a final key theme – the sustainability imperative and in particular the challenge we face on the climate front. We are excited to share with you a piece on decarbonisation written by our London investment colleagues.
As our CEO Hendrik says in the Q&A published here, “If we ignore this challenge as an industry in the way we price investments, we would be doing our clients, our long-term savers, a massive disservice. Therefore, one of the key things we are doing, is trying to price the risk of the positive and the negative externality that a company may be contributing to the economy. You may have a wonderful consumer goods business, but if it dumps lots of plastic in the ocean there is ultimately a problem. There is a liability. We need to think about that liability.”
Enjoy this edition of In Perspective.
Deputy MD, Africa Client Group
* To 30 April 2021. Global Equity=MSCI ACWI, SA Equity=ALSI, IMF as source of global growth
In an exclusive interview with Patrick Cairns, the editor of Citywire South Africa, Hendrik du Toit reflects on the future of active asset management, the sustainability imperative and the role of capital markets in meeting the social challenges of the future.