The Weekly Focus. A Market and Economic Update 26 November 2018

Transcription

1 The Weekly Focus A Market and Economic Update 26 November 2018

2 Contents Newsflash...3 Market Comment... 3 Other Commentators... 4 Economic Update...6 Rates STANLIB Money Market Fund STANLIB Enhanced Yield Fund STANLIB Income Fund STANLIB Extra Income Fund STANLIB Flexible Income Fund STANLIB Multi-Manager Absolute Income Fund... 11

3 Newsflash The elephant in the room remains the tariff war between the US and China Market Comment Stock markets continued to bleed last week, while bond markets, including emerging market bonds, gained in value, as did emerging market currencies. Witness our 10-year bond yield at a 3-month low this morning of 8.89% (price high) and the rand a 3-month high of While the US 10-year yield seems to have formed a double top on the charts around the 3.25% region (double bottom price-wise), it appears that the S&P 500 Index may possibly (hopefully) be forming a double bottom. If so, that s a positive development. It was previously a reverse-head-and-shoulders, but the index declined further to nullify that pattern. Even the JSE ALSI could be forming a double bottom, with the index trading early today at 50,989, only just above its previous low on 30 th October of 50,756. Also sentiment around the world is very depressed on equities. That s a good sign too, hinting that most if not all the selling by weak holders has already happened. However, the elephant in the room remains the tariff war between the US and China. Only if some progress is made on that front are markets likely to show much appreciation. Trump and Xi Jinping are due to meet at the G20 summit in Argentina at the end of the week, or over the weekend. If no progress is made, stock markets may well remain depressed, even possibly the US market, where the S&P 500 Index is now down -10.2% from its recent record high and - 1.3% in 2018, while the Nasdaq Index is -14.4% from its high and -1% in It s a pity that our Reserve Bank doesn t have the same mandate as the US central bank or Federal Reserve, which is to grow employment (i.e. grow the economy) whilst containing inflation. To increase interest rates as the Reserve Bank did last week, when we have 28% or so unemployment, almost zero economic growth, a 3-month high in the rand and a rand oil price that has tumbled -33% from its recent high (now negative in 2018) seems so bizarre. Certainly if the Fed was our central bank, no way would they have hiked. In fact, they probably would have cut, considering our dismal economy and shocking unemployment rate, which causes so much pain and crime. That would have made the most sense, right? Surely..anything to help in any way possible, not hinder? RMB Morgan Stanley note that so far this month Impala Platinum has done best with a +22% return, Pioneer Foods +10%, Capitec +9%, Life Healthcare +8% and Goldfields +8%, while British American Tobacco has tumbled further by -24%, South32-20%, Harmony - 18%, Glencore -17% and Sasol -17%. The big tumble in the oil price, so positive for us as a country, has actually knocked Sasol s share price down by -29% from its recent high some 7 weeks ago. It is now -2.4% in In turn this has aggravated the correction in the JSE Resources Index, now -16% from its recent high and -0.2% in This was the one area of the JSE that had done well. In the US the Health Care sector of the S&P 500 Index is now easily the leading sector at +8.4% in 2018, then Consumer Discretionary at +3.4% and the new Communication Services sector +1.2% (since June), while the previously hot IT sector is now barely positive at +0.2%. On the losing side Energy is now worst at -11.6%, Industrials -7.8%, Financials -6.8% and Consumer Staples -3.7%. Locally, the All Bond Index has perked up as bond yields have declined and the rand has strengthened, so the All Bond Index return for 2018 is now back ahead of cash at +7%.

4 The total return of the ALSI is now -12.6%, right at the lowest point in 2018, while the SA Listed Property Index total return is also down at -22.8%, very close to its low for the year. The JSE ALSI s historic dividend yield is at its highest level for the year at 3.6%, while the historic dividend yield of the SA Listed Property Index is at 8.9%, also its highest level, just as bond yields decline below that level, now 8.88% for our 10-year yield. One of the better American market analysts or commentators I subscribe to is Steve Sjuggerud of Stansberry Research in the US, who have a very big following in the US and elsewhere. He has written a very interesting piece on Tencent and Naspers in his latest monthly bulletin, which Vilosh Jagaroo or I am very happy to forward to anyone interested. I think it is well worth a read. The point is Sjuggerud is an American and therefore has many thousands of shares to choose from, both in the US and globally, especially after the latest heavy correction. Yet this month he speaks almost only on our little weak and troubled country s Naspers and Tencent. That is quite something. I agree with Sjuggerud that there is great value and opportunity in world stock markets at this point, including our own, but we may not experience any joy without a resolution in the trade war. Other Commentators US Market Analyst, Elaine Garzarelli A typical bull market correction is 4-7% when the quants model indicators are bullish, but some corrections have been as steep as -20% in 1998 and -14% in 2015/16 and -10.2% so far in this one. The quants model reading declined to 75% from 77% the previous week, but remains bullish (below 30% is a bear market). While a recession would be a serious problem for shares, there is no evidence as yet of a severe economic downturn ahead. Meanwhile lower petrol prices will hold the headline inflation rate in the US down over the next 2 months. With US junk bond yields up at 7.16% and the 10-year yield down at 3.04%, the ratio of the two has turned up, leading to a bearish reading for the quants model. Fair value for the S&P 500 Index is now 3,060, +16.2% above current levels. When the model is bullish as it still is now, shares normally rise above fair value by 15-25%, on average. Most US economic data in the 4 th quarter have been healthy, but some recent stats show a slowdown. Durable goods orders have been weak, while there is uncertainty about trade and the strong dollar, which makes exported goods less competitive in foreign markets. Housing has also been weak. The US economy continues to grow as indicated by the US leading economic indicators, which are up +5.9% year-on-year, signaling solid growth into next year. The leading indicators are a weighted gauge of 10 indicators. A level below 0 percent is bearish. Growth remains steady, but a little slower than early in BCA Research Lower oil prices are a double-edged sword for the US economy. As the episode shows, the hit to employment, drilling activity and investment capital is quite capable of offsetting the benefit from lower prices at the pump. The oil market was quite tight, with low inventories, until over a million barrels of Iranian oil were returned to global markets, causing a supply glut. It had nothing to do with slowing demand for oil. BCA views a supply windfall as a lesser concern for the world economy than a demand shortfall.

5 BCA views the oversupply as a temporary condition that OPEC can change. The US economy seems to be on track for 2.5% growth in the 4 th quarter. The global economy is decelerating, but the US is growing above trend. The Fed will eventually cut off the expansion through excessive interest rate hikes, but a recession is probably not likely to occur before BCA sees plenty of upside for the oil price in Their base case is an average Brent oil price of $82 in 2019, versus under $60 now. However, this assumes that OPEC will agree to cut production on 6 th December to blunt the effect of the Iranian waivers. It also assumes that global demand increases by 1.5 million barrels a day next year (from 1.6 this year). The Venezuelan economy is near collapse. Its 2.1 million barrels a day of production of 2 years ago has fallen to 1.3 million today and it could shrink to 1 million next year. The pipeline extension to support more production in the Permian basin in the US will not be completed until the second half of Also it assumes the Iranian waivers are temporary and US-Iranian tensions could worsen. MSCI s All Country World Index is now just 5% above the point where the BCA Global Investment Strategy service would upgrade global equities to overweight from neutral. Below we show a graph of the MSCI World Index, which is -6.1% in dollars in and hopefully forming a double-bottom here, amidst a high level of pessimism, as well as lower bond yields. Source: I-Net Bridge Paul Hansen Director: Retail Investing

6 Economic Update 1. SA consumer inflation slightly lower than expected in Oct at 5.1%y/y. Core inflation unchanged at 4.2%. Large petrol price reduction in December will ease Reserve Bank concerns. 2. SA Reserve Bank decided to increase rates by 25bps. Very close decision. The MPC highlighted the need to manage inflation expectations down to 4.5% and remains concerned about the longer term risks to inflation. 3. S&P decided to leave South Africa s credit rating unchanged, in-line with market expectations. Ratings outlook is stable. S&P flagged the low growth as a major concern, but the tone of the statement was a little more encouraging. 1. In October 2018, South Africa s headline CPI inflation rose by 0.5%m/m, which was slightly below market expectations for an increase of 0.6%m/m (STANLIB 0.6%m/m). As a consequence the annual rate of inflation rose from 4.9%y/y in September to 5.1% in October, which was also fractionally below market expectations for the annual rate of inflation to rise to 5.2% (STANLIB 5.2%y/y). Very encouragingly, core consumer inflation remained unchanged at 4.2% in October, highlighting that the underlying level of SA inflation remains very subdued despite recent Rand volatility. Core inflation has been below the mid-point of the target for the past six months and has averaged a mere 4.1% over the past 12 months. For 2017 as a whole, South African inflation averaged 5.3%, down from 6.3% in 2016, but up from 4.6% in SA inflation has averaged a respectable 5.6% over the past five years, and 6.1% over the past 10 years. For 2018 we forecast that SA inflation will average around 4.7%, including the impact of the VAT hike early in the year as well as a sharply higher petrol price and a weaker Rand. The average for 2019 is currently estimated at about 5.3%, which suggests that consumer inflation is unlikely to move closer to the mid-point of the inflation target within the next 12 months, but at least remain well inside the Reserve Bank s inflation target of 3% to 6%. Food inflation rose by 0.3%m/m in October, with the annual rate of food inflation easing to 2.9%y/y from 3.4%y/y in September and 2.9%y/y in August Almost every category of food inflation is still within the inflation target including meat at 4.0%. The one key exception is vegetable inflation, which is above the target at 7.7%y/y. Food inflation is expected to remain under control over the coming months given that agricultural and manufactured food inflation are both very subdued. Petrol inflation rose by a massive 6.1%m/m in October, with the annual rate up at a very significant 22.8%y/y largely due to the R1.00/l increase in the petrol price during the month. In the seven months from April 2018 to October 2018 the petrol price rose by a massive R3.32/l or 24%. These increases reflect the combination of a higher fuel levy, weaker exchange rate and elevated oil price. Fortunately, there is currently a massive R1.97/l daily over-recovery on the petrol price and an average month-to-date over-recovery of R1.64/l. This suggests that consumers can expected a very large decrease in the petrol price in December; possibly the largest petrol price reduction ever recorded in South Africa. It would, however, be very tempting for the energy authorities to hold-back on some the price reduction in December in order to build-up a surplus in the Slate account. Nevertheless, our inflation forecast currently assumes a R1.60c/l reduction in the petrol price in the beginning of December A reduction of R1.60/l would reduce the monthly inflation rate by 0.5 percentage points, which is very significant within the context of SA s inflation target. Under these circumstances, SA s annual rate of petrol inflation would fall from around 22%y/y to a mere 5.0%y/y!

7 CPI excluding food and petrol is well within the inflation target and slightly higher at 4.4%y/y (4.3% in September), while core inflation (CPI excluding food, fuel and electricity) remained unchanged at 4.2%y/y. Services inflation was recorded marginally lower at 5.1%y/y (5.2%y/y in September), while administered price inflation remained extremely high at 12.1%y/y, mainly due to the high water, energy and fuel inflation. The inflation rate for pensioners is elevated at 5.4%y/y. Despite recent Rand volatility, SA inflation remains under-control at both a headline as well as a core level. Core inflation has averaged a mere 4.2% over the past 12 months, which is below the mid-point of the inflation target. All of this suggests that there is very little evidence of a build-up of inflation pressure, which presumably reflects the weak economic environment, with most retailers struggling to maintain pricing power. This is partly reflected in the fact that SA consumer inflation excluding administered prices is a mere 3.9%y/y, highlighting that the one area of inflation that remains a concern is administered price inflation, which includes items such as water, energy and fuel. In that regard, the anticipated cut in the petrol price in December 2018 should help to ease some of these pressures. The latest inflation report, looming large petrol price reduction and the ongoing weakness in domestic economic activity, supports the view that the Reserve Bank can afford to leave interest rates unchanged this week. However, many emerging markets have increased interest rates in 2018 including Russia, Indonesia, India, and Mexico. These increases partly reflect the pressure emerging economies are facing as a result of higher US interest rates and a systematic tightening of global financial market conditions. The Reserve Bank has also been consistent in highlighting the importance of inflation stabilising around the mid-point of the inflation target (4.5%) and not at the upper-end of the band (6%). Consequently, it is fair to argue that the risk to SA interest rates is to the upside. 2. The South African Reserve Bank increased the Repo rate (Repurchase Rate) by 25bps to 6.75% at its MPC meeting. The market expectation was fairly evenly split between a hike of 25bps and no change in rates (STANLIB expected a hike of 25bps). The Reserve Bank last adjusted interest rates in March 2018, when they cut rates by 25bps. According to the MPC, the interest decision was extremely close with 3 members voting for an interest rate hike and 3 members voting for rates to remain unchanged. In making the decision the SARB highlighted that the balance of risks to the domestic inflation outlook are to the upside, and that monetary policy actions will continue to focus on anchoring inflation expectations near the mid-point of the inflation target range in the interest of balanced and sustainable growth. In terms of inflation the Reserve Bank highlighted the following: The near-term inflation outlook has improved, however, the longer term risks to the inflation outlook remain elevated. The weaker exchange rate and the impact of higher oil prices have contributed to increasing inflation since March The inflation forecast has improved marginally since the previous MPC. Headline inflation is now expected to average 4.7% in 2018 (down from 4.8%), before increasing to 5.5% in 2019 (down from 5.7%) and moderating to an unchanged 5.4% in Administered prices, including fuel, electricity and water tariffs, are expected to increase at rates above the upper end of the inflation target range. The MPC noted the rising inflation trajectory which, while remaining within the target range, continues to deviate from the mid-point of the target range. The MPC continues to assess the risks to the longer-term inflation outlook to be on the upside. These risks include tighter global financial conditions, a weaker exchange rate, higher wage growth, international oil prices and rising electricity and water tariffs.

8 In terms of the growth outlook the Bank highlighted the following: The global economic outlook is expected to remain broadly favourable over the short term. However, medium term risks are tilted to the downside due to less synchronised global growth. The domestic growth outlook remains challenging. Recent monthly data on economic performance in key sectors suggests a more moderate recovery in growth in the third quarter than expected in September. The SARB now forecasts growth in 2018 to average 0.6% (down from 0.7% in September). The forecast for 2019 and 2020 is unchanged at 1.9% and 2.0% respectively. Household consumption expenditure has been constrained by recent tax changes, weak employment growth as well as low growth in credit extension to households. The MPC assesses the risks to the growth forecast to be moderately on the downside. As previously highlighted the Committee remains of the view that current challenges facing the economy are primarily structural in nature and cannot be solved by monetary policy alone. In terms of the Rand exchange rate the Bank highlighted the following: At current levels, the QPM assesses the rand to still be undervalued. Tighter global financial conditions, financial market volatility and the change in investor sentiment towards emerging markets remain key external risks to the rand. Over the medium term, it is likely that the rand, along with other emerging market currencies, will remain volatile. In summary the MPC argued that it had to decide whether to act now or later on rates. According to the Bank given the relative stability in the underlying core inflation measure, delaying the adjustment could give the MPC room to re-assess these unfolding developments in subsequent meetings. However, delaying the adjustment could cause inflation expectations to become entrenched at higher levels and thus contribute to second round effects, which would require an even stronger monetary policy response in the future. It is clear that despite inflation surprising on the downside in October 2018 and the petrol price expected to fall very sharply in December, the longer-term risks to the inflation forecast are to the upside. Inflation is still expected to remain largely under control over the coming year, but will tend to drift slightly higher and therefore further away from the midpoint of the inflation target. The MPC acknowledged the weakness in the domestic economy, but highlighted their view that the economic challenges facing the country are largely unrelated to interest rates. Given that the Reserve Bank continues to emphasise the importance of inflation stabilising around the mid-point of the inflation target (4.5%), the risks to SA interest rates are still to the upside. Importantly, this does not imply successive rate increases, but rather ongoing vigilance by the Reserve Bank 3. Standard and Poor s Ratings Services decided to leave South Africa s international credit rating unchanged at BB. (BB is two notches below investment grade). In addition, S&P kept South Africa domestic credit rating unchanged at BB+. (BB+ is one notch below investment grade). S&P also maintained its stable outlook for the ratings. S&P had downgraded South Africa s international and domestic credit ratings by one notch back in November The latest ratings decision by S&P was in-line with market expectations. In making their latest ratings decision S&P highlighted most of the issues they flagged in their May 2018 credit rating review. These included the country s weak pace of economic growth, particularly on a per capita basis, as well as the large fiscal debt burden and sizeable contingent liabilities.

9 Furthermore, South Africa faces significant challenges in light of high levels of poverty, unemployment, and economic inequality. More positively, according to S&P, SA s credit rating is supported by the country's monetary flexibility, well-capitalized and regulated financial sector, and deep capital markets, alongside moderate external debt, in particular low levels of external debt denominated in foreign currency. Some specific factors discussed by S&P included: Land redistribution: According to S&P, while expropriation without compensation will force some businesses to reconsider investing in the country, they expect that the rule of law and enforcement of contracts will largely remain in place and will not significantly hamper investment levels in South Africa. Government debt: South Africa's government debt is overwhelmingly denominated in rand, with only about 12% denominated in foreign currency. This shields the government debt from exchangerate shocks. However, nonresidents hold 39.4% of the government's rand-denominated debt as of September 2018, down from 43% six months ago. While the large presence of international investors in South Africa's debt markets helps improve liquidity and can lower the government's cost of funding, it also means the economy is vulnerable to global emerging market sentiment and global interest rate movements. Contingent liabilities S&P regards SA s contingent liabilities as sizable. This reflects the increased risk that South Africa's large SOEs could require further extraordinary government support than currently provisioned. In addition, plans to improve the underlying financial position of SOEs with weak balance sheets may take time. S&P estimate overall public-sector debt at around 71% of GDP in 2018, including the debt of central and local governments and of public sector companies. Current account While the size of SA s current account deficit is relatively low by historical standards, its financing remains vulnerable to changes in investor sentiment as it is predominantly funded through volatile portfolio and other investment inflows. Such inflows can be susceptible to changes in foreign investor sentiment and emerging market appetite, and since interest rates in the US are expected to rise further, this will likely eventually lead to an increase in the government's refinancing costs. Fiscal discipline SA s subdued economic growth and higher-than-expected VAT refunds have led to shortfalls in government revenues in At the same time, higher-than-expected publicsector wage agreements and the weak financials of SOEs put pressure on expenditures. While S&P expects the government to remain committed to broad fiscal prudence, the upcoming election in 2019 makes expenditure cuts or revenue increases unlikely. However, there may be some revenue upside if SA can improve economic growth in Financial sector S&P thinks SA s financial sector is largely profitable and well capitalised, although small banks have recently been hit by governance issues. Banks continue to rely on concentrated short- and medium-term wholesale funding from nonbank financial institutions, since retail savings are low and contractual savings tend to be dominated by professional money managers Government s new policy proposals S&P argues that while the government s policy framework remains broadly in line with previous ANC plans, there is a renewed impetus to implement the reform agenda. In September 2018, the government announced a fiscally neutral economic stimulus plan that aims to boost growth without diverging from the fiscal stance.

10 Government is also targeting increased private-sector investment and the ease of doing business. The new ANC leadership is working on measures to enhance the governance and financial sustainability of state-owned enterprises (SOEs). If successful, S&P believes these steps will have a positive impact on medium-term growth and the stability of public finances. Consequently, S&P expect the economy to recover from this year's low and average slightly above 2% over Nevertheless, this is close to 0% on a per capita basis. Lastly, S&P indicated that they could lower SA s credit ratings if there was continued fiscal deterioration, for example, due to higher expenditure pressures or structurally weaker economic performance, or if external financing pressures were to heighten. They could also consider lowering the ratings if the rule of law, property rights, or enforcement of contracts were to weaken significantly, undermining the investment and economic outlook. In contrast, S&P could raise SA s credit ratings if economic growth or fiscal outcomes strengthen in a significant and sustained manner, or if the risks of deterioration in external funding were to subside. Overall, the decision by S&P to leave South Africa s credit rating unchanged was broadly anticipated. Furthermore, the tone of the statement was a lot more positive compared with November 2017, and a little more encouraging compared with May There were also no real surprises in their statement. We still expect S&P to maintain the current rating until after the national election in 2019, with any upward adjustment to the rating highly dependent on higher economic growth, improved fiscal parameters, and a clear indication that the SOEs are in better financial health. Please follow our regular economic updates on Kevin Lings & Laura Jones (STANLIB Economics Team)

11 Rates These rates are expressed in nominal and effective terms and should be used for indication purposes ONLY. STANLIB Money Market Fund Nominal: 6.64% Effective: 6.84% STANLIB is required to quote an effective rate which is based upon a seven-day rolling average yield for Money Market Portfolios. The above quoted yield is calculated using an annualised seven-day rolling average as at 23 November This seven- day rolling average yield may marginally differ from the actual daily distribution and should not be used for interest calculation purposes. We however, are most happy to supply you with the daily distribution rate on request, one day in arrears. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. STANLIB Enhanced Yield Fund Effective Yield: 7.85% STANLIB is required to quote a current yield for Income Portfolios. This is an effective yield. The above quoted yield will vary from day to day and is a current yield as at 23 November The net (after fees) yield on the portfolio will be published daily in the major newspapers together with the all-in NAV price (includes the accrual for dividends and interest). This yield is a snapshot yield that reflects the weighted average running yield of all the underlying holdings of the portfolio. Monthly distributions will consist of dividends and interest. Interest will also be exempt from tax to the extent that investors are able to make use of the applicable interest exemption as currently allowed by the Income Tax Act. The portfolio s underlying investments will determine the split between dividends and interest. STANLIB Income Fund Effective Yield: 8.23% STANLIB Extra Income Fund Effective Yield: 7.69% STANLIB Flexible Income Fund Effective Yield: 6.65% STANLIB Multi-Manager Absolute Income Fund Effective Yield: 7.0% Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to future performance. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 23 November For the STANLIB Extra Income Fund, Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The historical yield over the last 12 months is reported for the STANLIB Multi-Manager Absolute Income Fund.

12 Disclaimer Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and scrip lending. Portfolios are registered under the STANLIB Collective Investments Scheme (the Scheme). The manager of the Scheme is STANLIB Collective Investments (RF) (PTY) Ltd (the Manager). The Manager is authorised in terms of the Collective Investment Schemes Control Act, No. 45 of 2002 (CISCA) to administer Collective Investment Schemes (CIS) in Securities. Liberty is a full member of the Association for Savings and Investments of South Africa (ASISA). The Manager is a member of the Liberty Group of Companies. The manager has a right to close a portfolio to new investors in order to manage the portfolio more efficiently in accordance with its mandate. A schedule of fees and charges and maximum commissions is available on request from the Manager. The Manager does not provide any guarantee either with respect to the capital or the return of a CIS portfolio. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. Forward pricing is used. A money market portfolio is not a bank deposit account. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. An annualised seven day rolling average effective yield is calculated for Money Market Portfolios. Excessive withdrawals from the portfolio may place the portfolio under liquidity pressures; and that in such circumstances a process of ring-fencing of withdrawal instructions and managed pay-outs over time may be followed. TER is the annualised per cent of the average Net Asset Value of the portfolio incurred as charges, levies and fees. A higher TER ratio does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. Portfolios are valued on a daily basis at 15h00 except Fund of Funds which are valued at 24h00 daily. Investments and repurchases will receive the price of the same day if received prior to 15h00. The trustee of the Scheme is Standard Chartered Bank. The investments of this portfolio are managed, on behalf of the Manager, by STANLIB Asset Management (Pty) Ltd, an authorised financial services provider (FSP) under, FSP No. 719, under the Financial Advisory and Intermediary Services Act (FAIS), Act No. 37 of As neither STANLIB Asset Management (Pty) Limited nor its representatives did a full needs analysis in respect of a particular investor, the investor understands that there may be limitations on the appropriateness of any information in this document with regard to the investor s unique objectives, financial situation and particular needs. The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential value of any information contained herein. STANLIB Asset Management (Pty) Limited does not expressly or by implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized financial adviser in this regard. STANLIB Asset Management (Pty) Limited is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 26/10/719). Compliance No.: 8ZB Melrose Boulevard, Melrose Arch, 2196 P O Box 202, Melrose Arch, 2076 T: (SA Only) T: +27 (0)

13 E: Website: STANLIB Asset Management (Pty) Ltd Reg. No. 1969/002753/07 Authorised FSP in terms of the FAIS Act, 2002 (Licence No. 26/10/719) STANLIB Collective Investments (RF) (Pty) Limited Reg. No. 1969/003468/07