All bets on offshore flexibility
With the ever increasing need to diversify investments into markets that offer more liquidity, Giles Mokoka of the South Africa based SEI Investments explains the benefit of navigating the investment universe by diversifying with offshore investments.
Looking at the Namibian Stock Exchange Mokoka saw the obvious in that the economy like many others in the region, is constrained as it is built mostly on extractive primary industries and financial service providers.
“There is a lot more opportunity to invest away from concentration of risks within southern Africa to global regional markets,” Mokoka said, pointing out that investors at times need the certainty of being able to withdraw their funds quickly and that with countries like Ghana, Tanzania and even Namibia, the restricted liquidity of the market does not allow for quick reversals.
SEI has 2900 employees worldwide with offices in the United Kingdom, Ireland, the Netherlands, Hong Kong, South Africa, Dubai, Canada and the US with US$670 billion in assets under management and administration and US$73.6 billion in institutional assets under management.
“The Namibian economy is just as large as it can be at the moment. If all the money is used up in say construction then there is a place for local investment vehicles particularly pension funds and space for offshore derivatives by diversifying our own markets and attracting more local investment” he commented adding that from a currency perspective, the pegging of the Namibia Dollar to the South African Rand creates the same situation for both countries.
Mokoka noted how South Africa is struggling to service its debt amidst a sluggish 1% GDP growth that followed the depreciation of both currencies as the high cost of imports heightens concerns over foreign debt much like Namibia’s is concerned over servicing its offshore liabilities.
Said Mokoka, “The old age adage of not putting all your eggs in one basket as the loss of capital in the market can not be predicted is SEI’s selling point.”
According to Mokoka pension assets outside of Africa would have increased hypothetically speaking over the 2015 calendar year by 33% simply through the devastating weakening of the Rand. This does not take investment performance into consideration.
Mokoka who is currently based in Johannesburg also has experience in servicing institutional clients within Investec Asset Management’s Fund Management Team, based in Cape Town.
“From a regional perspective, funds for long term returns for investors who retire in 10 to 15 years are matched to expenses at the time in currency values and US dollar to Rand terms” said to illustrate his point about investment flexibility in terms of onshore and offshore markets. Familiarity can be a disadvantage when it comes to investing, he stated.