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Benchmarks July / August 14

The US economy appears to be out of the doldrums having had only two quarters of negative GDP growth since the beginning of 2011, year-on-year GPD recording 2.4% at the end of quarter 2 of 2014. The following graph in Efficient Select newsletter of 18 August, provides this interesting review of the change in US GDP since 2005:

The US economy appears to be out of the doldrums having had only two quarters of negative GDP growth since the beginning of 2011, year-on-year GPD recording 2.4% at the end of quarter 2 of 2014. The following graph in Efficient Select newsletter of 18 August, provides this interesting review of the change in US GDP since 2005:

The Fed’s large scale asset purchase program has been reduced steadily from its high of US$90 bn per month, and will probably fade out by the end the end of the year or early 2015. The Chinese economy has decelerated from growing at the rate of 9.2% in the first quarter of 2012 to growing at only 7.5% at the end of the second quarter of 2014. Interestingly, not too long ago when the growth rate was still double digit, a growth rate of below 9% was labelled a ‘hard landing’. China’s leadership is in the process of restructuring the economy from an export driven economy to one driven by internal consumption. The Eurozone has just been showing some signs of timid recovery but this will not doubt be short-lived as the result of the sanctions that were imposed on Russia, an important growth market for Europe. Just to mention Germany as one country affected by the sanctions, it is exporting around €35 billion p.a. to Russia which is equivalent to 1.4% of Germany’s GDP. Over the first 5 months of the year, which probably still only reflects pro-active steps taken by German exporters in anticipation of sanctions due to be imposed, Germany’s exports to Russia have declined by 15%. Extrapolating this over a full 12 month period, Germany’s GDP could easily shrink by around 1% as the result of sanctions. The Japanese economy has hardly been showing any growth for a long time. Although it has returned a few encouraging economic indicators for the first few months of the year, economic growth and inflation having recently reached 4% the latest developments are turning negatively once again, so not much can be expected from Japan either for the next 12 months.
Developing economies such as South Africa are still disappointing. These countries depend on the export of commodities to a significant extent and China has been one of, if not the biggest export market for their commodities. The restructuring of the Chinese economy will no doubt impact negatively on China’s demand for commodities and therefore on the South African and Namibian economies. Our economies are thus likely to grow sluggishly over the next year or two. South Africa is expected to grow at only 3% or less over the next 5 years, while the Namibian economy is expected to average around 4.5%. Inflation is expected to average around 6% both in SA and Namibia. Both SA and Namibia are expected to run a deficit on their trade balances for the next 3 years. Interest rates have recently been lifted marginally but the trend is evident, essentially forced by the weakness of the currency and the trend in interest rates overseas, particularly in the US.

There is now much talk in global financial media that the Fed is on a mission to move towards a more normalised interest rate environment meaning that there is a great likelihood of the Fed rate being raised as soon as towards the end of this year. We have already seen foreign investment capital flow into SA having dried up since the end of last year. The last key economic parameter, the Rand: US$ exchange rate has weakened steadily since the early part of 2011. In the light of a sluggish local economy, lower demand for local commodities from China and a resulting negative trade balance, an absence of foreign portfolio flows and the upward trend in interest rates, the Rand will remain under pressure for the next couple of years and so will be the highly leveraged local consumer.
In this economic environment, we will see negative short-term interest rates, low to negative returns on longer dated stocks and muted growth in equities that are dependent on a growing economy and low interest rates. We would therefore not expect returns on equities to exceed 4% in real terms over the next 3 years. On the positive side, our local economies are either near the bottom of the economic cycle or have already passed the bottom and are turning up gradually with a low downward risk and more upward potential.
Under these circumstances, we consider equities the preferred asset class and would maximise exposure to equities for the foreseeable future but on a very selective basis in terms of the countries, and in terms of the type of company to invest in. Since the local equity market on average is expensive, international diversification into markets with superior growth prospects should be maximised. These are countries that were worst hit by the financial crisis and have not recovered yet as well as emerging economies. Stock picking skills are critical to investment in equities. A ‘safe play’ of investing in companies with superior free cash flows, high dividend yields and low p:e’s in industries that focus on basic consumer needs and perhaps in new technologies is what we would be looking for.
Download the complete Benchtest fund investment overview for July 2014 and the Early Bird for August 2014 at

About The Author

Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.