Oct 20, 2021
The last time I wrote to you it had felt like we were on the cusp of a more hopeful future. Equity markets had rebounded, vaccine rollouts had gained momentum and our fragile economy was starting to show some green shoots. Then, sadly, the devastating riots and violence erupted in Kwa-Zulu Natal and pockets of Gauteng and yet again, our beloved country appeared to be teetering on the brink of collapse.
As South Africans our emotions always seem to oscillate between the depths of despair and the heights of euphoria. Those few days in July – along with the continued devastation wreaked by the pandemic – again laid bare how tenuous the threads holding our economy and society together are. And as is often the case, the destitute and vulnerable suffer the most. Incredibly, communities came out in force to assist in clean-up operations and non-governmental organisations and corporate South Africa joined hands to mobilise relief efforts. At Ninety One, we also worked swiftly to ensure the safety of our people in the affected areas, and were privileged to partner with incredible relief organisations to support their invaluable work. As Winston Churchill said, the courage to continue is what counts, and we saw this in the resilience of so many South Africans coming together to try and undo some of the damage.
But South Africa is not alone in facing difficulties. The entire world has been in a prolonged fragile state. Whether it’s resurgent waves of Covid-19, upheaval in the Middle East, strained relations between the US and China or extreme weather events caused by the climate crisis, nothing is certain. We all have burdens to bear and challenges to face.
But with challenges come opportunity. Not just opportunity to seek out investments for you but also to effect change for the better. Our purpose at Ninety One is to invest for a better tomorrow. In recognition of the existential threat posed by climate change, and South Africa’s vulnerable position as a heavy carbon emitter, Ninety One became the first South African investment manager to sign up to the Net Zero Asset Managers Initiative. In doing so, we joined a group of 128 asset managers from around the world managing a combined $43 trillion (almost half of the entire asset management sector globally). By signing we have committed to supporting the goal of achieving net zero by the year 2050 or sooner.
While there is worldwide consensus to curb climate change, we want to use our voice not merely to support the achievement of net zero, but to do so in ways that take account of the special circumstances of South Africa and other developing markets. We want the world to get to net zero – but via a fair transition and not at the expense of the developing world. After all, while emerging markets are often heavily reliant on fossil fuels, they are not responsible for the bulk of the world’s emissions to date.
In this issue, Hannes van den Berg and Unathi Loos from our SA Equity & Multi-Asset team sets out the practicalities of investing in a net zero world, especially here at home, where we will need to rely on coal for the foreseeable future and have coal producers listed on the Johannesburg Stock Exchange. In addition, Deirdre Cooper, who has been at the forefront of sustainable investment for more than two decades and is Co-Portfolio Manager of our Global Environment Strategy, shares how the industry has evolved and how investors can reconcile doing good with achieving good returns.
Boasting three decades in our industry, Chris Freund, Co-Head of SA Equity & Multi-Asset, has experienced many a boom and bust. The word ‘unprecedented’ is currently de rigueur to describe what is going on in the global economy and markets – from unprecedented sovereign debt levels, to unprecedented low and negative interest rates, to unprecedented budget deficits and money printing. Be sure to read his take on how we should navigate the immediate future with so much uncertainty about. And while there is no easy money to be made, there is opportunity, as he explains.
As you are aware, 2021 marks the thirtieth anniversary of our firm. In closing, 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 appreciate your continued support. Stay safe.
Deputy MD, Africa Client Group
The current environment includes many ‘unprecedented issues’, from unprecedented sovereign debt levels, to unprecedented low and negative interest rates, to unprecedented budget deficits and money printing. How can we learn from history to navigate the opportunities that lie ahead?