STANDING TITLE OF COMMITTEE ON FINANCE PRESENTATION HEARINGS PRESENTATION TRANSFORMATION SUBTITLE 13 14 OCTOBER MARCH 2017 2015 1
WHO IS ASISA? An industry association representing the majority of South Africa s: asset managers, collective investment scheme management companies, life insurance companies, linked investment service providers and multi-managers ASISA comprises 127 member firms 2
COMPETITIVENESS FINANCIAL MARKET Rating factor RANK (out of) Efficiency, Trustworthiness, Confidence 7 (144) Availability of financial services 6 (140) Regulations of security exchanges 2 (140) Attracts foreign capital: 39% of listed JSE companies 30% of all bonds in issue R 2 trillion R 1 trillion SA up 7 places to 49 in 2016 from 56 in 2015 Source: World Economic Forum Global Competitiveness Report 2015-2016 3
FINANCIAL SECTOR FLOWS Unit Trust savings Life offices Retirement savings Short Term Insurance R 1 899 bn R 2 622 bn R 4 723 bn R 156 bn Non-banking financial services Placed with banks 10% R 1 642 bn Government Bonds, Local Government and SoC s 20% R 1 852 bn Corporate bonds and loans 16% R 784 bn Equities 53% R 5 027 bn Fixed property 1% R 94 bn Deposits R 942 bn Debt R 700 bn Source: SARB Quarterly Reports 30 June 2016 Pension fund members: Policies in issue: 16 million 33 million Unit trust account holders: 5.7 million 4
20 000 000 18 000 000 16 000 000 14 000 000 12 000 000 10 000 000 8 000 000 6 000 000 4 000 000 2 000 000 - PENSION FUND MEMBERS IN SA 5 Number of SA resident retirement fund members* 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
AVERAGE MANAGER RETURNS FOR GLOBAL FUND versus INFLATION To 31 January 2017 Alexander Forbes Global Large Manager Watch* Willis Towers Watson Industry Median CPI inflation 3 years 7.6 8.8 5.7 5 years 12.3 12.9 5.7 10 years 10.4 10.8 6.2 20 years 14.3-5.8 1450 1200 950 700 450 200 100-50 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cumulative value of R100 'invested' on 1 March 1997 Alexander Forbes Global Large Manager Watch* CPI inflation 6
JSE OWNERSHIP (Top 100 companies) SA BLACK OWNERSHIP (23%) DIRECT OWNERS (10%) Strategic Partners 6.0% Community Schemes 2.5% Employee Schemes 1.5% INDIRECT OWNERS (13%) Savings pool 13.0% SA Black, 23% Unknown, 16% Foreign funds, 39% The direct ownership component has largely been achieved through BEE deals, the stat has been quoted by the President and Presidency. SA Non- Black, 22% The 23% quoted in the graphic, becomes 39% when the foreign operations are excluded as required by BEE legislation. The unknown component mostly relates to small pension funds. Only 7% of the JSE is owned by white individuals. 7
STATS - ASISA MEMBERS 1/2 ACTUAL 2005 LIFE OFFICES ACTUAL 2015 TARGET 2015 SA BLACK OWNERSHIP * 16% 31% 25% MANAGEMENT and CONTROL Black Board 30% 49% 50% Black Executive Directors 22% 47% 50% Black Senior Top Management n/a 39% 40% Employment Equity Black senior management 16% 35% 60% Black middle management 32% 48% 75% Black junior management 45% 75% 80% Skills development 1.2% 4.9% 3% * The listed members in our sector are on average 41% foreign owned All Statistics based on draft 2015 FSC Council report. To facilitate progression through junior management up to middle and senior management, up to 8% of payroll committed to skills development of this cohort in revised FSC. 2005 for illustrative purposes as this is when the FSC process commenced 8
STATS - ASISA MEMBERS 2/2 ACTUAL 2005 ASSET MANAGERS ACTUAL 2015 TARGET 2015 SA BLACK OWNERSHIP * 16% 31% 25% MANAGEMENT and CONTROL Black Board 30% 43% 50% Black Executive Directors 22% 39% 50% Black Senior Top Management n/a 39% 40% Employment Equity Black senior management 16% 34% 60% Black middle management 32% 45% 75% Black junior management 45% 67% 80% Skills development 1.2% 4.7% 3% * The listed members in our sector are on average 41% foreign owned All Statistics based on draft 2015 FSC Council report. To facilitate progression through junior management up to middle and senior management, up to 8% of payroll committed to skills development of this cohort in revised FSC. 2005 for illustrative purposes as this is when the FSC process commenced 9
MONOPOLISTIC NATURE? Large size does not equate to monopolistic tendency Large size facilitates the mobilisation of large pools of capital for the funding of major projects ASISA members include 33 Life Offices Their long term liabilities amount to R 2.4 trillion Growth in these businesses requires shareholders from collective savings pools (they become shareholders of reference) 10
HIGH DEGREE OF COMPETITION IN ASSET MANAGEMENT INDUSTRY There have been large changes in market share over the last six years 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Change in Market Share between 2010 and 2016 A competitive industry: 1. Many players 2. Share of top 10 continues to fall 3. Low Herfindahl- Hirschman index (HHI) of 650 (The Herfindahl-Hirschman index (HHI) is a commonly accepted measure of market concentration, and ranges from 0 to 10 000. The SA Asset Management industry scores 650) Source: Alexander Forbes 11
SKILLS DEVELOPMENT / INCLUSION / INCLUSIVE ECONOMIC GROWTH ASISA Foster the Future ASISA Academy ASISA Foundation ASISA ESD Fund Deployed by ASISA members: R 550 million Black business support under new FSC: R 27 billion (together with the banks this amounts to R 100 billion) 12
THANK YOU 13