David Christie, Head of Distribution for Southern Africa at Ashburton, says investors are seeking to externalise their assets.

“Across the board, we have seen sentiment change quite dramatically. Even on falling international markets, we have seen a rush in the past two to three weeks of investors – both institutional and individual – looking for asset swaps which have been snapped up in days,” he says.

With the South African rand weakening substantially, Christie adds that investors may be anticipating a continuing slide for the currency, which is in itself a potential self-fulfilling prophecy. “Down to the man in the street, there is concern about the currency,” he says.

“There are a lot of question marks. There is the power supply issue, whether or not the World Cup tournament will fall into place smoothly and the state of flux in the political climate.

“It comes down to predictability and the ability for investors to quantify risks and anticipate returns. Until this can be done with confidence, the outlook may appear cloudy,” he continues.

International investors are also confronted by a rising tide of uncertainty and are more risk adverse given developments in global financial markets.

But where there is risk and volatility, there is also the opportunity for gains, agrees Christie.

“It’s not all doom and gloom. There is good and bad all over the world; while the Chinese may have cut their GDP figures from above 10% to 9.6%, they are still buying resources, and South Africa is a resource-driven economy. Investors tend to have a very short memory; people have made vast returns in the past few years where we have been on an up cycle,” he says.

What goes up does come down. The converse applies too. “It’s a question of riding out the cycle. A smart investor will be more circumspect and more conservative. There are decent opportunities which remain and those investors with fresh cash can find decent opportunities,” Christie explains.

Bank stocks are an example; while he believes the sub-prime crisis is not over yet, with potentially more dirty laundry yet to see the light of day, banks present good value. “The banks have been hammered but are a decent buy right now. The old advice applies – buy when there is blood on the streets and you will make money. It is a question of time more than money and it does take courage, but these investors can prosper even in this adverse climate.”

For further information: David Christie, Head of Distribution, Ashburton; +27 11 245 5039
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