View of the month February 2018

Transcription

1 View of the month February 2018 Dear Investor, I think we all agree the inauguration of President Cyril Ramaphosa deserves to be the View of the Month for February 2018! Other important news during the month of February included: - The 2018 budget speech see summary below highlighting important items from the speech for investors - The cabinet reshuffle pity the number of ministers were not shrinked and they did not get rid of Bathabile Dlamini, Malusi Gigaba and Nomvula Mokonyane - The stronger rand thanks to ramaphoria but unfortunately the currency took a bit of a dive post the land expropriation without compensation motion was adopted in parliament - Eskom long-term debt downgrade S&P downgraded the power utility s debt to 'CCC+' (the seventh run of non-investment grade) with a negative outlook due to liquidity stresses - Steinhoff perpetual prefs & bonds were suspended on the JSE because the company failed to submit financials timeously. German press reports internal s has emerged indicating former Steinhoff CEO Markus Jooste was in contact with German Steinhoff managers about allegedly misrepresenting financial data back in 2014 already

2 Budget speech impact on investors: - VAT increases from 14% to 15% from 1 April 2018 on the supply of goods and services provided by registered vendors - There were no adjustments to the top four income tax brackets and below inflation adjustments to the bottom three brackets. The highest marginal tax rate for individual taxpayers remains unchanged at 45%. - The exemption on local interest earned for individuals younger than 65 years remains R per annum. The exemption for individuals 65 years and older remains R per annum. Foreign interest remains fully taxable - Dividends tax remains 20% on dividends paid by resident companies and by non-resident companies in respect of shares listed on the JSE - Interest withholding tax remains 15% on interest from a South African source payable to nonresidents. Interest is exempt if payable by any sphere of the South African government, a bank or if the debt is listed on a recognised exchange - The annual cap on contributions to tax-free savings accounts remains at R with a lifetime limit of R The first R of a retirement lump sum remains tax free - The first R of a pre-retirement lump sum withdrawal remains tax-free - The capital gains tax inclusion rate for individuals and special trusts remains at 40%, and for other taxpayers at 80% - Estate duty has increased to 25%. The tax is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% above R30 million - Donations tax is levied at a flat rate of 20% on the value of property donated. Any donations exceeding R30 million in one tax year will be taxed at a rate of 25%. The first R of property donated in each year by an individual is however exempt from donations tax - Offshore allowances in pension products governed by regulation 28 has been increased from 25% to 30%. At the same time, the allowance for investments into the rest of Africa also increased by 5% to 10% The markets Despite all the good news in February, the JSE All Share index ( -2%) was down for the month but remains ( 3.2%) up for the last 6 months. The financial sector gained the most from ramaphoria and was ( 5%) up for the month. Listed property continued its downward spiral ( -14.5%) down for the month. The resource sector ( -4.9%) and the industrial sector ( -3.5%) was also both down. The MSCI World ( -4.5% in Rand terms) for the month. The rand appreciated against all major currencies for the month: ( 0.6%) stronger against the US Dollar ( 3.3%) stronger against the Pound Sterling ( 2.8%) stronger against the Euro The Bitcoin (BTC) crypto currency posted an almost 5% recovery for the month against the US Dollar, it ended at US$10,440 per BTC. On the commodity front, the Gold Price ( 2% in US Dollar terms) declined the month of February while the price of Brent Crude Oil ( 3.1% in US Dollar terms) also declined.

3 In March Moody s will announce if they intend to extend the reprieve for longer or downgrade us. At Vista we suspect they will extend the reprieve. Why go through the effort of a reprieve and then downgrade after serious attempts to change? The petrol/diesel price Fuel prices are set to drop in March as South Africans benefit from a stable exchange rate and lower international fuel prices. The Automobile Association (AA) said it expects petrol to drop by up to 38 cents a litre, diesel by 47 cents and illuminating paraffin by 26 cents. Remember to only fill up again on Wednesday 7 March! The sad news is that we will be paying 52 cents more per litre for fuel from the 4 th of April. This announcement was made by the previous finance minister during the 2018 budget speech. The increase would include a 22c/litre increase in the general fuel levy, and a 30c/litre rise in the Road Accident Fund (RAF) levy. What s been happening at Vista We ve had a cracker of a month on Tax Free investments, Retirement annuities and Offshore investing. Many thanks to all our clients for their support! Vista was approved by the FSB as a juristic representative under the Intrepid Capital FSP. We will therefore be moving all our clients to this FSP during the month of March. Even though this is just a regulatory change to our clients, it is a massive step towards an exciting business partnership with Intrepid Capital! Quote of the month In line with our ramaphoria theme this month, we though the following quote by John Templeton to be appropriate: "Bull markets are born on pessimism, grown on skepticism, matures on optimism and dies on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."

4 Financial Indicators as at 28 February 2018: Global indices: Global indices 1 Month:

5 Global indices 5 years: JSE Sectors:

6 JSE Sectors 1 Year: JSE Sectors 5 Years:

7 Currencies: Currencies 1 Month:

8 Currencies 1 Year: Currencies 5 Years:

9 Interest Rates: Interest Rates 12 Months: Regards, Vista Wealth Management Magnus de Wet (preferred) Office: