Hedge against risks for 2023 just to get to 2024 in one piece
Both the investment manager and the insurer in the Standard Bank stable see 2023 as a difficult year given the meteoric rise in interest rates coupled to the run-away imported inflation affecting fuel and food.
At Stanlib and Liberty Life Namibia’s first-ever combined roadshow in Windhoek and Walvis Bay at the end of March, the company’s in-house experts set the stage for what they believe will the main investment themes for this financial year. Named the InPerspective Roadshow, the event showed investors what they can expect over the short-term.
Sade Gertze of Stanlib Namibia discussed the economic landscape, saying that although the 2023 annual growth projection suggested that the global economy would avoid a recession, some economies would likely experience a recessionary phase at some point during the year. “Currently, the mining sector is leading the growth story largely due to higher production volumes from the diamond mining sector. Recent and expected further investment in mining infrastructure will possibly enhance capacity and output going forward. Developments in green hydrogen and offshore oil should also add to the growth prospects of the sector,” he said.
Gertze said that high inflation and high interest rates are placing a huge burden on Namibians. “We see that growth remains below pre-pandemic levels although it has recovered about 98.7% of lockdown induced losses and we expect a positive but slow growth trajectory in 2023. Inflation is showing signs of moderation and is expected to roll over in the second half of 2023 on base effects. With high conviction to support local economic recovery the Central Bank is expected to maintain the Repo rate throughout 2023 and only start cutting rates in 2024, lagging the South African Reserve Bank with rate cuts.”
In his economic update, Kevin Lings, Chief Economist at Stanlib, concentrated on the consequences of fighting inflation, which was currently the biggest challenge facing the world economy. “The only way to get inflation down is to put up interest rates and that has been the case – almost worldwide – but most certainly in the USA, Europe, South Africa and also Namibia.” He forecast that the interest rates would remain high for the remainder of 2023 and pointed out that these high interest rates have led to unaffordable housing – especially in the US, a dwindling property [market] and overall economic slowdown.
‘In South Africa loadshedding and the energy crises is the biggest factor that influences the economy negatively. SA cannot move forward until they deal with loadshedding. Mining production is declining, manufacturing is stagnating and the South African economy is not even back to pre-COVID levels,” he said. Business confidence continued to be at an all-time low and even though corporates had big reserves and funds in their bank accounts – R1 trillion – they are currently not willing to spend due to uncertainty on numerous levels.
On a positive note, Lings said that tourist numbers are on the rise – albeit mostly in and around Cape Town but ‘at least they are staying for one night or more.’ Furthermore, he explained, that the private sector was also responding positively to investments in power projects. ‘A total of 406 projects were completed last year, putting 1664 megawatts into play, while in 2023 so far we are looking at 40 projects with around 1073 megawatts.”
He added that interest rates would come down next year and forecast a slight economic upswing for South Africa in 2024 with GDP growth projected at 1,9%. “For now, however, protect your risk and let us get through 2023.”
Nyasha Masimbe cast a look at the post pandemic era and how insurance needs to adapt to changing circumstances of both companies and individuals. In his presentation he advised that community wellbeing has become extremely important over the past three years and insurance needs to adapt to changing lifestyles. “There is no longer a one size fits all approach and Liberty Life Namibia has crafted and evolved solutions which are applicable to different life stages and needs.”
Muntu Mdwara, Quantitative analyst presented invited guests with the Standard Bank Inflation Plus Fund as a solution when markets were volatile and said: “Just as sailors must be prepared for unexpected waves, asset managers must be able to adapt to changing market conditions and adjust your investment strategies accordingly to avoid ‘taking on water in the boat’.”
From the left, Warren Kozonguizi – Head of Sales, Liberty Life Namibia, Kevin Lings – Chief Economist, Stanlib SA, Sade Gertze – Portfolio Manager, Stanlib Namibia , Nyasha Masimbe – Head of Product and Pricing, Liberty Africa Insurance, Muntu Mdwara – Quantitative Analyst, Stanlib SA Multi-Strategy Team and Zandria Venter – Head: Business Development, Stanlib Namibia.