Low expectations for 2020 investments

Greg Hopkins, Chief Investment Officer at PSG Asset Management, and Mikhail Motala from the investment team. PHOTO: SEITHATI SEMENOKANE

It looks like 2020 is going to shape out to be quite a tough year for investments. This was stated by Greg Hopkins, Chief Investment Officer at PSG Asset Management. Hopkins was speaking at the PSG Asset Management Outlook, reviewing the investment environment and discussing available opportunities with financial advisors from the province.

“There is a lot of interest. We’ve got the midterm budget speeches, we’ve got potential downgrade from Moody’s, and we’ve got the Lekgotla NEC in June where we know all the news will have conflicting views, often negative reports that pertain to that gathering. 2020 is expected to be worse than 2019 and expectations are incredibly low,” said Hopkins.

Hopkins added that in 2019 PSG told their clients that the stocks in portfolios were cheap and should deliver attractive long-term returns, however, their portfolios performed poorly in 2019 as many of these stocks got cheaper. “Understandably, some clients have become sceptical about the prognosis for the cheap securities that we continue to own,” he said.

Mikhail Motala from the investment team stated that there are a few mitigating factors which affect how people view the investment opportunities in the country. “When we talk about investing in South Africa, people go from these risks, for example Eskom, to immediately conclude that South Africa is uninvestable, when in actual fact there are quite a few mitigating factors,” said Motala.

“The first mitigating factor is the credibility of the South African Reserve Bank. What we also have, is a finance minister who is the ultimate custodian of the finances of the country, who has become a cheerleader not only for the growth plan of the country, but also for the Reserve Bank and its independence,” he explained.

Hopkins concluded by highlighting the critical role financial advisors play in being critical to ensure that their clients remain invested in assets that should provide capital growth.

Seithati Semenokane