View of the month May 2018

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1 View of the month May 2018 Dear Investor, Our View of the Month picture is the beautiful autumn colours of Johannesburg which were observed at Emmarentia Dam from the Botanical Gardens side I have to say, if our office in Cape Town was open already it would probably have been a picture of rain. So thankful for the much needed rain in the Western Cape It s been a very busy month at Vista Rupert Giessing (CFA) signed off our new Retirement Annuity (RAs) and Preservation Fund portfolios to accommodate the revised allowable foreign exposure from 25% to 30%. This enhancement is off the back of the changes to Regulation 28 of the Pension Funds Act during this year s budget speech. We will be in contact with all our clients during the month of June in order to implement the enhanced portfolios. Clients looking for assistance or wanting to view the improved statistics (Performance, Standard deviation, Sharpe and Sortino ratios) of this enhancement can view it by clicking here. We also launched our High Equity Portfolio (ZAR) during the month of May. This portfolio is ideal for investors looking for cost effective access to the local stock market. It is a great investment option for bonuses or savings with a time horison of longer than 5 years. Henk Lindeque (CA (SA), CFA) is the main portfolio manager on this initiative and it is great to have him onboard. Click here to view the portfolio factsheet.

2 Last but not least, Vista Wealth s Magnus de Wet has been invited to be the guest speaker at Objectway and MCI Breakfast briefing on 21 June The function explores the latest trends that are converging to create the new wealth management landscape. Contact Vista Wealth or MCI Consultants if you would like to attend this function. SA Economy Inflation increased from 3.8% to 4.5% year-on-year. The increase was lower than expected but still within the South African Reserve Bank s (SARB) 3% - 6% target range. It was the highest inflation rate since December last year, mainly due to prices of food and non-alcoholic beverages and housing and utilities. Interest rates the SARB Monetary Policy Committee (MPC) left the repo rate unchanged at 6.5% with the prime rate at 10.0%. The unfortunate news was a potential 0.25% increase in the final quarter of the year. The main contributors are the high oil price hovering at $80 per barrel and emerging market currencies coming under pressure from a strong US dollar. Rating agencies S&P Global kept SA s foreign-currency debt unchanged at two levels below investment grade. "Despite upward revisions, SA's economic growth remains tentative, and the government's debt burden continues on a rising path. They also said that they would consider further downgrades if the rule of law, property rights, or enforcement of contracts were to weaken. Fuel prices According to the AA, fuel prices will jump to record highs in June on the back of stronger international oil prices, and a deficit carried over from April. Petrol is expected to rise by up to 85 cents a litre, diesel by 87 cents, and illuminating paraffin by 82 cents. Remember to fill up before midnight Tuesday 5 June. The pie chart below indicates how the petrol price is currently made up. 36% of what you pay for petrol goes towards levies and taxes!

3 The markets The red block in the table on the next page shows the market stats for May In short the JSE All Share index was -3.6% for the month ( -5.6% for the year). The Resource sector was the only positive sector 3.8% for the month. The Financial sector was hit the worst -6.5%, closely followed by the Listed property sector -5.9%. The Rand had a very volatile month again. At its best it was trading at R12.19 (11 May 18) against the US Dollar and at its worst it was trading at R12.89 (21 May). It ended the month at R12.70 against the US Dollar which is clearly on a roll after US unemployment rate dropped to 3.8%, while increases in average US hourly earnings also beat expectations. Bloomberg reported, this matched the lowest unemployment rate in almost five decades, indicating the strong labour market will keep powering economic growth. The numbers reinforce expectations for Fed policy makers to raise interest rates when they meet on June 12-13, and may spur bets on two more hikes this year after that, rather than one, noted Bloomberg The Bitcoin (BTC) crypto currency lost almost -16% against the US Dollar. It ended the month at US$7,550 per BTC.

4 Politics Last week marked President Cyril Ramaphosa s first 100 days in office. Below a summary from EWN on how he fared: - He fired 10 ministers, most of whom were central to allegations of state capture, but he still kept some controversial individuals in place - He moved fast to effect major changes at Eskom by appointing a new board, leading to the axing of several executives facing serious allegations - There are also new board members at Denel, Prasa and Transnet - He appointed special envoys to attract investors with the target of bringing in $100 billion to boost the country s economy - He s taken action against suspended Sars commissioner Tom Moyane, removed Arthur Fraser as DG of the State Security Department but Shawn Abrahams is still the head of the National Prosecuting Authority (NPA). Some of the lowlights of the latest local government audit findings released in May: - Only 33 of the country s 257 municipalities received a clean audit in compared with 48 the year before - Irregular expenditure rose 75% to R28.4-billion in up from R16.2-billion the previous year - In 22 municipalities tenders worth R7.92-million were given to councillors - The Auditor-General was unable to audit procurement worth R1.3-billion due to missing or incomplete information at 52 municipalities The North West Province is finally relieved of Supra Mahumapelo after the 49-year-old announced that he is taking "early retirement" as premier. The province has been embroiled in violent protests during May, as residents and ANC members called for Mahumapelo to step down. Mahumapelo, who is also chair of the North West ANC, has been accused of corruption, presiding over a breakdown in governance, and failure to deliver services in the province. In a sad turn of events, the Gupta s ill-gotten loot were returned after the NPA failed to convince the court that a conviction might follow. The assets worth at least R250m were seized in April in relation to the Estina dairy farm matter. The case illustrates the difficult task ahead in retrieving the proceeds of state capture and bringing those implicated to book. Quote of the month We like the following quote by legendary boxer George Foreman: The question isn t at what age I want to retire, it s at what income. Click here to read a previous article in FinWeek by Vista Wealth addressing this dilemma.

5 Financial Indicators as at 31 May 2018: Global indices: Global indices 1 Year:

6 Global indices 5 years: JSE Sectors:

7 JSE Sectors 1 Year: JSE Sectors 5 Years:

8 Currencies: Currencies 1 Month:

9 Currencies 1 Year: Currencies 5 Years:

10 Interest Rates: Interest Rates 1 Year: Regards, Vista Wealth Management Magnus de Wet (preferred) Office: magnus@vistawealth.co.za info@vistawealth.co.za