The Importance of Offshore Investment

 

The South African Chamber of Commerce and Industry (Sacci) has just announced that its business confidence index sank to a 22-year low, requiring policymakers to do something extraordinary to right the tilting ship. We have to go back to before the 1994 elections to match anything like the current mood of despondency.

 

There is some consensus that the rand will likely end this year around current levels of R13.50 – R14, but what if there is a blow-out to R16 or even R18 in the next two years, as some have suggested? This is not beyond the bounds of possibility, as the rand has already skidded from R7 to R14 to the US dollar since 2011. The emerging market rout is by no means over, which means further pressure on the rand. I believe that wealthy South African investors should move assets abroad to beat inflation and a weak rand. Inflation in South Africa was at 4.6 percent in August and is more than double most of the developed world while the rand fell to a record low against the dollar in September. The currency has dropped 13 percent this year as a decline in commodity prices, power shortages, an unfriendly business environment, rigid labour laws constrain Africa’s most industrialized economy and account for the migration of capital outside the country by most high net worth individuals.

 

Fortunately, there are a number of very competent fund managers offshore who are achieving returns in excess of 8% pa in Sterling! If this appeals to you, talk to us, we have a number of options available.