Hi, Any views or comments about the prospect of South remaining a safe investment with a change of government would be appreciated. I ask because, it's not often in the news. Is there anyone from South Africa here, or with investments in that country?
Hi Trading1, I am from South Africa. With regards to it being a "safe country" - no, it's still an extremely violent place to live. The new government has made the country far worse in so many different ways. I would be wary in placing any money there at all, and if I did, because I'm sure there are many opportunities there, I would monitor the environment constantly.
G-Boa, how do you protect your savings in South Africa? Do you keep money in banks, hold various currencies, hold gold coins, bury coins in the ground or perhaps you have some other way to secure wealth?
I live in South Africa and I'd say our problems may be big but at the same time this country is made out to be a disaster zone when it's not. There is so much opportunity here and that may be because where there is greater risk there is greater reward. We rank near the top for the most new dollar millionaires in 2005 - http://www.sagoodnews.co.za/search/benchmarking/574437.htm South Africa may have a long way to go but it is pretty much the only place in Africa that is going anywhere.
I have property and stocks in SA, The biggest risks to me is currency depreciation. The country is running a widening deficit on it's current account, nothing by US standards but as a developing economy enough to but pressure on the Rand. As long as commodities stay strong that will counter balance depreciation to an extent. The government is happier with a slightly depreciated stable rand to try to reduce the CA deficit, but that is a double edged sword because increased inflows from commodity sales are met with increased costs of imported finished goods in Rand terms, so a difficult one to get out of. When the Rand drops it does it in a big way and that is always worrying. The JSE has also had a big big run since 2003 so not sure how much legs it still has to go higher from here.
"G-Boa, how do you protect your savings in South Africa? Do you keep money in banks, hold various currencies, hold gold coins, bury coins in the ground or perhaps you have some other way to secure wealth?" Most of the people I know with money keep it in blue chip stocks, in banks (where they pay a high interest rate compared to here in the States), real estate and precious metals. Impala plats, Anglo-American plats, etc., gold companies and diamond companies all play a big role in safe investment. Also, energy companies like Sasol have attracted a lot of investors over time. Kruger rands and dollars are what's kept in the safe....along with the 12-gauge, the walther, the colt 45, ammo, expensive jewellery, etc The rand is a very volatile currency and would be worthwhile looking at if you trade forex. One day we'll see the rand lose it's ass and a lot of people are going to get rich on it's way down. But, to agree with the other poster from South Africa, there are golden opportunites still happening there all the time. Where there's opportunity though, bear in mind there are risks. And since you ARE dealing with a third world country, you should be cocksure of your gamble. It's not a place I would leave my money in for extended periods of time, but definitely worth looking at. As far as opportunities go, China is pouring a sh!tload of money into South Africa, with their eyes set on energy and commodities. Take a look here http://www.greenstarusa.com/news/06-11-13.html - although this is out of the U.S. Biofuel is is a big thing in S.A. - http://alt-e.blogspot.com/2006/05/ethanol-fuel-in-south-africa.html, also read up on things like this http://www.military.com/features/0,15240,100140,00.html and this http://motoring.iafrica.com/newsbriefs/163143.htm I know it's the big hype that has somewhat died down a bit, but in South Africa for example, when the price of gas goes up, it doesn't come down the way it does like here in the States. The squeeze is on down there and alternative type fuels is a happening thing. With China throwing tons of cash in South Africa's direction, companies and notions that would be largely overlooked here in the States are already cruising over there. I wish I could name some for you, but my eye is not on the ball. It's also worthwhile to mention that South Africa is a big sugar producer and that sector, the companies involved therein, might look to do well along with the shift towards biofuels.
Hi G-Boa, faure, Your informed views are helpful, though what about a change of government? It seems theres good and bad, the people are skilled and educated but theres so much social strife and despite this, the JSE keeps roaring up. Though what about a change of government, for example to the candidate who was on the rape charge and sings "bring me my machine gun". Is the government itself, and it's transistion likely to be stable do you think?
"Your informed views are helpful, though what about a change of government? It seems theres good and bad, the people are skilled and educated but theres so much social strife and despite this, the JSE keeps roaring up. Though what about a change of government, for example to the candidate who was on the rape charge and sings "bring me my machine gun". Is the government itself, and it's transistion likely to be stable do you think?" This is all personal opinion, but I'm sure the transition will be stable within the country. However, it will most likely be blown a bit out of proportion by speculators - just the same as it will most likely be here if/when the Democrats come into power. The people are not that skilled and educated in S.A., there just happens to be a a tier of highly educated people working feverishly behind the scenes trying to hold it together - at least that is my view of the setup. It IS lasting, present tense, and is determined to last - but the infrastructure of the country is overburdened and worn out (roads, police, healthcare, prisons, etc.) and is set to drag the country down over the long run. I am not sure why the JSE is doing like it's doing, but since South Africa's backbone is commodity-driven, that might be one part of the answer. I know local business is blazing - my cousin is partner in a private-equity firm specializing in the fixed-income environment and those guys are making money arse over fist. A lot may also be attributed to the real estate boom that seems to have topped - a lot of expats are using and have used the strength of their foreign currency savings to invest in real estate over there as well as in partnerships with old friends and family that remained there and opening companies doing business. I'm not fully clued into the political scene over there - but my view of a fresh face government is negative on the country by the mere fact that it's another step back. The "less able" are stepping in and the "relativley stable" are moving out. I would like to hear what Faure has to say on this matter, since he's in the thick of things. I stand to be corrected, but that's my mindset.
The succesion debate is a big thing here at the moment with everbody playing cat and mouse. The ex-vice president Jacob Zuma, doesn't stand much chance of coming out ahead. There is a new breed of black capitalist in this country who want to work towards privitisation and free markets. There is also the group who want to keep things government owned and in a type of socialism. The latter have the support of the poor black majority but the former have power within the ruling party (ANC). A name that is being thrown about quite a lot is Tokyo Sexwale (pronounced ses-shwale), who is a big proponent of capitalism and privitisation (he actually hosted a local version of the Apprentice). I'd personally be happy to see him lead. The JSE has moved from 7000 in March 2003 to 25155 today so the local market is flying. The reason for this is pretty simple, earning of local companies are surging, with 40% growth in earnings being common. The black middle class is growing rapidly and everybody is spending money hand over fist. The GDP is still pretty stable aroung 4% though but my guess is that will rise. That being said this is still Africa and infrastucture is a huge problem. To give you an example, it seem like the amount of new cars on the roads is growing so rapidly that they can't build new roads fast enough and last year we had to resort to creating car-pool lanes. A good business site is www.businessday.co.za to keep updated.
Be very cautious before you trade on the JSE Johannesburg Stock Exchange. If you place a trade that is clearly erroneous they will hold you to it, bit like Tokyo. The bourse is a monolopy and a law unto themselves. The brokers regularly commit fraud and nothing is done. Although the country has insider trading laws, insider trading is rife. Who ever heard of an exchange with a perfect settlement record, its what the JSE claims. So some stiff puts 1c in for a $100 stock and it settles? Also since the elections in 1994 the exchange is still lily white, that won't last for long, although if black people take it over it may be an improvement. The point being that soon they will raise the ire of the political elite in the mean time the management on the exchange are filling their pockets nefore they get thrown out. The nett effect is, be careful before you commit your money to the JSE, South Africa on the other hand is a different story. Just be weary of listed stocks on the Johannesburg Stock Exchange JSE. The palce is a fraud run un behalf of a few insiders. Bit like Grasso and the NYSE