US Inflation Lower, Copper Price up, Local Elections and OM Wealth

Author

Jurie de Kock
April 12, 2024

US Inflation Lower, Copper Price Up and Local Elections   

Last week, I shared some highlights on SA, with lower inflation coming through, higher tax collections, and signs that the local economy is showing more growth again.   

Earlier this week, Magda Wierzycka, CEO of Sygnia (one of the many product providers we are accredited and licenced with), shared that the world’s democratic superpowers can no longer afford to ignore Africa. You can read her article via Business Live by clicking on this link;

This is against the backdrop where last year we shared our expectation that global inflation would be heading lower this year, with the caveat that it would be “sticky” on the way down. Lower inflation rates are usually accompanied mainly by good market conditions for the risk assets of shares and property, locally and abroad. Therefore, we keep a close eye on inflation.  

US Inflation | Certainly Lower, but Sticky on the Way Down

Looking offshore again, on Wednesday, US inflation came in slightly higher than the month before, at 3,5% versus the 3,4% expected.

This featured in the news headlines this week. I thought this longer-term graph of US inflation makes better sense and perspective of the medium-term theme of “lower inflation-for-longer, yet sticky on the way down”;

Copper Price Up Overall

Many of our clients know I keep a close eye on copper prices. Copper is a very good supporting statistic of global growth, used in everyday manufacturing, and has little sentiment bias for investors. When the world does well, copper prices simply reflect this in the increased demand, which then causes the price to go up. 

The latest copper price over the past few months has seen a steady improvement over the past nine months;

Local Politics

Back at home, our elections take place next months, and where this impacts our personal lives, our client's wealth and our country, I thought this slide below rather interesting;

JP Landman’s Viewpoint | Election update

JP Landman also gave his view on the election outcomes here

We will monitor these closely over the coming weeks and adjust the percentages.

 Old Mutual Wealth via the Daily Maverick

This article featured Old Mutual Wealth in the Daily Maverick;

Old Mutual Wealth’s advantage lies in combining the broader Old Mutual group’s inter-generational, multinational heritage

Specialising in bespoke wealth and investment solutions for high-net-worth clients, Private Clients by Old Mutual Wealth witnessed remarkable growth, with assets under management reaching R59 billion by 31 December 2023. This 30% increase relative to the previous year effectively entrenches Old Mutual’s foothold within the high-net-worth segment.

This success is notable in challenging market conditions, a continued weak currency, and muted business activity in South Africa. The key to the success of private clients’ businesses lies in the ability to work with clients and their existing advisers to guide them on global wealth management issues that extend far beyond traditional asset allocation and portfolio management.

With international assets representing a significant portion of every high-net-worth South African’s portfolio, working with a trusted partner is becoming increasingly important. Private Clients by Old Mutual Wealth offers diverse specialist expertise geared toward helping high-net-worth clients navigate the intricacies of global citizenship.

The concept of global citizenship has gained prominence, particularly among South Africans seeking to expand their assets internationally. This shift presents distinct challenges in terms of wealth management and succession planning. Global citizenship transcends geographies, and as individuals and families become more globally dispersed, effectively managing assets across various jurisdictions demands a comprehensive understanding of the respective financial, legal, and structural considerations.

Throughout the last decade, the South African investment management industry has continuously debated local versus offshore investment exposure. However, the debate focuses too narrowly on asset management and short-term perspectives. According to Private Clients by Old Mutual Wealth, this is not aligned with the needs of true high-net-worth clients. Instead, it advocates for a paradigm shift towards holistic wealth management focused on multi-generational wealth planning.

From a pure investment perspective, the reality is that high-net-worth clients do not benefit from allocating a significant portion of their investment capital to South Africa, given its relatively small share of the global investment universe. Nonetheless, their economic stakes in South Africa, even after diversifying globally, remain noteworthy in absolute terms, and their typical business interests contribute meaningfully to local economic growth.

Therefore, the broader wealth management industry’s fixation on determining a specific percentage of offshore assets is misplaced within the high-net-worth segment, where clients are increasingly preparing for a future where some of their obligations will be in different jurisdictions or currencies. Practical scenarios include maintaining a lifestyle split between two continents (also referred to as a swallow lifestyle), funding tertiary education abroad for children or grandchildren, or emigrating to be closer to family in another country, necessitating income-generating assets.

In an environment where competing narratives vie for attention, securing reliable and trusted solutions can be challenging. The persistent uncertainty can be daunting for individuals and families who have diligently built up their wealth over several years.

Old Mutual Wealth’s advantage lies in combining the broader Old Mutual group’s inter-generational, multinational heritage with top talent in the industry. By leveraging over 100 Portfolio Managers and Product Investment Specialists, Old Mutual Wealth enables high-net-worth South Africans from all corners of the country to live and invest as global citizens, prioritising inter-generational wealth accumulation. The private client business further enhances this by guiding clients through the often overwhelming and complex process of effectively structuring, safeguarding, preserving, and transferring their families’ wealth and legacies over the long term.

The Private Clients by Old Mutual Wealth proposition is distinct. The business forges professional partnerships with financial advisors and clients, focusing on delivering on the key priorities for high-net-worth families or individuals. These include ensuring a reliable investment outcome, maintaining a well-structured balance sheet, offering personal and unrestricted access to relevant subject-matter experts, actively managing risk, crafting bespoke investment portfolios and fee structures, and providing secure custodianship of long-term wealth. Essentially functioning as a specialised family office, Private Clients by Old Mutual Wealth leverages an ethical, responsible corporate legacy that has stood the test of 180 years.

Solutions encompass an accessible international investment platform, trust structures, estate planning across multiple jurisdictions, fiduciary guidance, multi-currency exposure, guidance around the most suitable geographic locations, and access to a leading global investment management team. Partnering with Wealth Managers, Financial Planners and Advisors, Private Clients by Old Mutual Wealth guides clients through these intricate complexities, crafting tailored, integrated wealth and investment management solutions.

Looking ahead, Private Clients by Old Mutual Wealth remains committed to serving as a trusted wealth and investment manager to high-net-worth clients and their financial advisors, offering a platform to structure, preserve, grow and leverage wealth across multiple geographies and generations. 

FRIDAY FOOD FOR THOUGHT