Local investors briefed on 2008 fate

2007-11-28 00:00

Analysts at the group recently held a briefing with a select group of industry stakeholders.

The group is an independent financial services group with about R1,3 billion worth of assets under management, focusing on, among other things, asset management, insurance broking, offshore products and financial and estate planning.

Michael Porter, the group’s chief investment officer, explained that 2008 will be characterised by a careful balancing act between commodities, inflation and interest rates. He added that while the inflation outlook remains on the upside, the South African Reserve Bank is concerned about high food inflation and the high growth in services inflation.

He said that the current interest rate cycle is relatively benign in comparison to cycles of the past.

He said the hikes will continue to be “felt” by the economy, adding that the higher rates have to some degree been offset by employment growth, social grants and policy stability.

Regarding commodity prices, he noted that they are likely to remain “stronger for longer” once they stabilise at a lower level.

While metal prices have dipped, he expects a resurgence given that metal inventories are still at record lows. “We have not had the supply response that we would have had in the previous cycles.”

While the SA 2008 economic outlook will be characterised by volatility, the growth cycle remains intact and shares remain the cheapest of all emerging markets.

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