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Investment prospects in view of land expropriation

‘Bring some boxing gloves’ to the 2018 Quo Vadis series of seminars, suggests Brenthurst Wealth’s Magnus Heystek.

RYK VAN NIEKERK:  Over the last few years, Moneyweb and Brenthurst Wealth have presented the Quo Vadis series of seminars around the country. These seminars analyse the key challenges facing South Africa. The 2018 series kicks off on June 18 in Pretoria. The core theme of the 2018 series is Land Expropriation Without Compensation – Your Money, Your Business, Your Property. Magnus Heystek of Brenthurst Wealth, one of the keynote speakers, is on the line. Magnus, welcome to the show. Why will the policy of land expropriation without compensation have such a big effect on people’s investments and money?

MAGNUS HEYSTEK:  Good afternoon, Ryk. It’s a very contentious issue, which has been in our midst for about 24 months now, and it’s sort of the big issue in South Africa – the ownership and distribution of land and how this stands or might be rectified by government. Now, the most extreme way to rectify is simply for government to take land and not compensate anybody. But we’ve seen what that has done to investor confidence and asset values in our neighbour to the north Zimbabwe, and the fear has always been that South Africa goes down that route.

We have it as official government policy and I think many, many thousands, if not hundreds of thousands, of not only South African investors but also international investors are watching to see how this will unfold and what impact it will have. Will it have an impact, first of all, on land values or confidence in general? Land rights now, as far as investor and potential investors in South Africa are concerned, is probably the number one issue that needs to be discussed and analysed and peeled away like an onion.

RYK VAN NIEKERK:  But is that not a bit alarmist? We live in South Africa. There is a lot of policy uncertainty, and the policy was adopted by the ANC when Cyril Ramaphosa was elected ANC president in December last year. Since then, investor and consumer confidence levels have improved.

MAGNUS HEYSTEK:  That might have improved, but there are questionnaire surveys in which people are asked about their views on the future. What is more important is how the markets have reacted, and of course not everything leads to land expropriation.

If one looks at the stock market, that’s down almost 6%, whereas the exchange rate is down about 8% over the same period of time. This is exactly why it’s such a topical issue. That is the real state of affairs, and one can only look at what is being done: is money coming into the country or leaving the country? Are investors sitting on the side-lines? This is where policy and action meet the road, so to speak. Investors might see that short-term investor confidence has gone up, but the rand and the JSE have taken quite a knock.

One needs to find out the true facts, and what could happen further down the line.

RYK VAN NIEKERK:  You have been a disciple of international diversification for many years and I assume these developments and policy uncertainties we are currently seeing justify this larger focus on international investment.

MAGNUS HEYSTEK:  In the medium to longer term most South Africans must become global investors, which leads to better outcomes, lower risk and improved returns, and that has been statistically proved for a long period of time. The defining of your offshore versus onshore investment becomes more pertinent and normally, when the rand is very high, people take the money offshore and when it’s low, they bring the money back. We are trying to educate investors to approach the portion of their portfolio in a far more non-emotional way and try to work out how they should be structuring their offshore assets.

RYK VAN NIEKERK:  What would your broad advice be to investors and especially to investors who attend the Quo Vadis seminar series?

MAGNUS HEYSTEK:  Much is priced into the market already. The rand, the currency, the equity markets and the bond markets. In fact, I’m starting to see signs that the local market might be at a turning point in terms of pressure outcomes two to three years down the line as far as South Africa is concerned. If we do succeed in cleaning up state-owned enterprises, if we do get rid of state capture, if we do get rid of corruption and fiscal issues, we could see an upturn in the South African market. But those objective investors might see that turning point and could make a lot of money.

Those are the issues that we are also discussing, not always negativity. Out of pessimism bull markets suddenly appear, and one of the issues is what should investors be looking for to determine whether it’s the start of perhaps a new bull market in South African equities. Our shares have been pulled down to fairly dramatically low levels and it’s normally these times that the smart investors seem to make a lot of their money.

RYK VAN NIEKERK:  And especially in the small- and mid-cap space.

Magnus, the line-up of speakers is exciting. Magda Wierzycka of Sygnia, Ralph Mathekga a political analyst and Jean-Pierre Verster from Fairtree Capital – a diverse range of speakers.

MAGNUS HEYSTEK:  Well I hope so. Bring some boxing gloves as well. But we have Magda, who has become an outspoken critic on many issues in South Africa. She’s always a dynamic speaker. Then of course Jean-Pierre Verster – he picked up the African Bank collapse as well before the market, and was very critical on Steinhoff. So Jean-Pierre Verster is one of our rising active managers in South Africa. And then Ralph Mathekga is a level-headed political analyst. And then of course yourself and myself to make up the team.

So there is very nice seminar content for all the various investors trying to make sense as to what happens.

RYK VAN NIEKERK:  Thank you Magnus. That was Magnus Heystek of Brenthurst Wealth.

Brought to you by Brenthurst Wealth.

The Quo Vadis Series kicks off on June 18 in Pretoria at the CSIR Conference Centre, and then on June 19 in Johannesburg and on June 21 in Cape Town. Ticket prices range from R350 to R450, and tickets are available at Quicket.co.za. For more information search “Brenthurst”.

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As a farmer and land owner, (bought not stolen) I try to have a positive attitude re: EWC.
I and a lot of farmers do not think that 50 million black people all want farms. All they want is a plot that they have title too that they can build house on. Borrow to build since they have title.
Government already has 4000 odd farms/plots they can distribute, other vacant government ground and the Ngonyama trust land. Weather the Zulu king likes it or not that trust with its suppression of people, 12th century type management and the poverty that goes with it has to be dismantled.

Looking back at the absolute ineptness and incompetence of the past distribution, just getting rid of what they have is going to take a very long time, another 24 years???? If they do manage it can you imagine the infighting that will take place. First will be cabinet ministers fighting over sheep/cattle/maize farms. Then the next layer will fight about the size of ground dished out. Then the location, imagine being a Johannesburger through and through and you are given a few hectares in the deep Karroo.

The problem is that the ANC is using this a vote catcher and it will anger a lot of their people when it does not happen. That will spark land invasions and in the rural areas a war will break out.

The ANC are hesitant about the direction they need to take. Is this vote catching or disposition of land in whites hands? The voter at the moment thinks that it is a way of taking from the whites, that secures a vote for the ANC. CR knows it cannot work and will along the line have to come clean but with Zuma working against him as hard as he can, he cannot now face reality.

You’ve summed it up well. Yes, and if I may add, CR’s main aim was not to save SA’s economy, but first and foremost to save the ANC from splitting, and/or losing the 2019 vote. So they incite a minority to keep the populist/socialist majority happy in making the right noises.

I think (commercial) farmland should be safe (except for ongoing crime, so one must remain security vigilant). The ‘land’ will be better served for the poor, close to towns/business hubs/industrial zones, where the traveling time/-cost to jobs is lowest. Farmland has no municipal services connected to it, hence not ideal for living & so far away from the nearest towns. Many commercial farmers have their own successful programmes going to benefit and train & provide their own farm working community with own land, becoming co-beneficiaries under guidance of experienced commercial farmers.

Think of it, IF successful commercial farmland goes up for grabs (like Zim style), SA will end up with much less than the current 55 million inhabitants, plus 650,000 farm workers will compete for work in the cities, within a dwindling industry (as farming is not isolated to the rest of SA economy, as you know).

IF SA has a farmland grab Zim-style grab, then we can just as well go pack our bags…because I’m not going to stay behind feeding everyone.

Spot on thanks for adding a little detail. My thoughts exactly, here you have a guy with kids in school, wife happy in Soweto or where ever and the ANC thinks they can ship them off to the sticks.

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