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Rands and Sense l a b o u r t r e a s s u d g e r e r c y b a u t n r t i s t i e s c a p i t a l Budget Day 2017 r a t e s p o l i c y t a x e s r e v e n u e g r o w t c h r e d i t Achieving Unpacking Innovate, An impossible balance The 2017 Budget Don’t stagnate... New money. Old money. Smart money always wins. They say money makes the world go round, but it’s smart money that changes it, and at Sasfin, we’re all about turning your money into smart money. That’s what makes us beyond a bank. Turn your money into smart money at Sasfin.com business | wealth | banking Sasfin Securities (PTY) Limited Reg No. 1996/005886/07 · [email protected] An Authorised Financial Services Provider 23833, Registered Credit Provider NCRCP22 and a Member of the Sasfin Group Contents 04 14 06 By: Bradley Mitchell, Mike Haworth and Alec Abraham Contributors Making rands and sense of the world we live in By: Michael Sassoon 09 Building a sustainable future By: Dr Anna Mokgokong 10 Unpacking the 2017 budget By: Liston Meintjes 12 Get it right the first time By: Bernard Du Plessis and Peter Dachs Achieving an impossible balance 21 Should you be investing locally By: Philip Bradford 22 Disclosing undeclared foreign assets in offshore trusts By: Hannelie La Grange 24 Don’t stagnate innovate By: David Shapiro 26 Glossary 04 Michael Sassoon Michael Sassoon is the Head of Wealth and Capital at Sasin. Since his appointment as Head of Wealth, Sasfin Wealth has grown assets under management and advisement from R70 billion to over R108 billion. In addition to fulfilling his executive duties, Michael is operationally involved in the growth and strategic direction of the Transactional Banking division. Michael holds an MBA with a special interest in finance from the Simon Graduate School of Business at the University of Rochester, New York. Contributors Liston Meintjes Liston has a strong technical and professional background in investment management and over 37 years’ industry experience. After qualifying as an actuary, Liston began his career in the investments division at the Old Mutual after which he co-founded Foord & Meintjes (now Foord Asset Management). Liston is based in New Zealand. Mike Haworth Bradley Mitchell Bradley is responsible for managing the investment research team at Sasfin Wealth, which is focused on creating global equity model portfolios and providing global macroeconomic views for divisions in Sasfin Wealth. The investment research team Mike is Sasfin Wealth’s Investment Strategist. An industry veteran, Mike began his journey in investment research at UAL Merchant Bank in 1985. From 2000 to late 2008 he was Head of Investment Strategy at Nedcor Securities and has since been consulting on investment strategy process and systems to a number of stockbroking and asset management houses. combines external and internal company specific fundamental research, for companies across all sectors and regions, with their global macro investment framework, to create and manage domestic and global equity model portfolios. Hannelie La Grange Dr Anna Mokgokong Hannelie la Grange is an associate in ENSafrica’s tax department. She specialises in employees’ tax and income tax for individuals and trusts, as well as international tax aspects. Her experience includes assisting South African and multinational clients in the establishment and ongoing management of their South African and offshore trusts. Born in Soweto and raised in Swaziland, Anna Mokgokong has received international acclaim for her entrepreneurial ability. As former President of the South African Women Entrepreneurs Network (SAWEN) and the International Women’s Forum of South Africa (IWFSA), Anna is a much sought-after public speaker with a keen interest in community development and women empowerment. Philip Bradford Alec Abraham Philip is the Head of Investment Management at Sasfin Wealth and manages Sasfin’s asset allocation and fixed income funds. He is also a member of the FTSE/ JSE Index Advisory Committee and the President of the CFA Society South Africa. Philip is responsible for managing various asset allocation, fixed income and equity portfolios for Sasfin’s institutional and retail clients. Alec is a Senior Equity Analyst at Sasfin Wealth. He has been involved in research across a broad range of industries for over 15 years, initially at the international debt rating agency, Fitch Ratings and then as an equity analyst at SG Securities, a division of Societe Generale, where he was recognised in a number of financial surveys, primarily for his work in the Healthcare sector. Alec is responsible for company specific fundamental analyses, with a specific focus on driving the creation and management of Sasfin’s company specific investment views for all companies being considered in the equity model portfolios. Bernard Du Plessis Bernard du Plessis is an executive and joint head of ENSafrica’s tax department. He is a chartered accountant and specialises in advising on international mergers and acquisitions, international fund structuring, private equity, and corporate and project finance transactions. David Shapiro David Shapiro joined Max Pollak and Freemantle, a member of the Johannesburg Stock Exchange (JSE) in 1972, shortly after qualifying as a Chartered Accountant. He was appointed senior partner in 1988 and served on the committee of the JSE from 1986 to 1992. In addition to managing private client money and serving as Deputy Chairman, he manages the Sasfin MET Equity Fund. David Shapiro has been a stockbroker and investment expert for over 44 years. Peter Dachs Peter Dachs is a director and joint head of ENSafrica’s tax department. He specialises in financial services, mergers and acquisitions, and international tax, and advises South African corporates and financial institutions on their domestic tax issues. L GLOBA er s a mb ch TNERS AND PAR 7 2 016 top tier firm ing Manag ual Intellecty Propert top tier firm top tier firm TM team of the year top tier firm top tier firm A F RFIC UNDS A GLOBAL Awards ESS USIN AL IA B IND JOURN W L A 2016 IGN FORE TOP W FIRMS LA top foreign law firm elite law firm 2016 client service ENSafrica | Africa’s largest law firm ENSafrica.com recommended firm Making rands &sense of the world we live in. W We are truly living in remarkable times. The US markets are continuing to breach record levels, but, in the context of the sluggish global economy, South Africa is under sustained pressure to keep inflation in check, ensure economic growth is achieved and unemployment reduced. To quote Sasfin Wealth’s Investment Strategist, Mike Haworth, 2017 will be a year characterised by geopolitical, economic and technological disruption both globally and domestically. The election of Donald Trump as US president, together with the Brexit, were arguably two of the most significant geopolitical events of the 21st century – and both occurred last year. 2016 was unnerving for so many reasons. The world has been dramatically shifted from its comfort zone – the aftershocks of the major global events of 2016 are still to be seen. Trying to make sense of 2016 is not easy and perhaps the biggest question of all is how did so many people manage to incorrectly predict the election of Trump and Brexit? The complete shock at the outcome of the two biggest events of the last twelve months (I’m not referring to Leicester City’s 5000-1 premier league title victory or La La Land being the first musical to dominate the Oscars in decades) still reverberates. The echo chamber effect Over the last few months, much has been said and written about alternate facts, the “post-truth” world and echo chambers. To understand how people got their predictions so wrong, one needs to reflect on the power and dangers of echo chambers. The people we connect to, the articles we read, the websites we visit and the posts we share all reaffirm our position. Those in the know happen to largely be part of this same echo chamber. They believed this echo chamber was reflective of the world. They assumed the majority of people thought like them. They were wrong and their core has now been shaken. In an echo chamber there is a lot of noise, most of which is just the repetition of one’s own voice. To make sense of what is really happening - which in the end is so critical to how one positions his life and his money - it is crucial to leave the echo chamber. To listen to the other side. One needs to move away from just hearing lots of similar repetitive noise to actually being willing to listen to alternative voices. Only then can one start making genuine sense of what is happening. To understand how people got their predictions so wrong, one needs to reflect on the power and dangers of echo chambers. The people we connect to, the articles we read, the websites we visit and the posts we share all reaffirm our position Against this backdrop, we have chosen to theme this year’s budget day event ‘making rands and sense of the budget.’ The Finance Minister has to unpack a notoriously complex subject, fraught with terms such as expenditure ceiling, excise duties, fiscal consolidation and public debt levels. The implications are far-reaching for us as individual tax-payers, and in certain cases, as representatives or directors of corporates and trusts. Our goal therefore, with this publication, is to simplify the task – cut through the jargon, and ensure that the readers reach a degree of clarity on what the 2017 budget means for them. 07 Rands and sense Going Global In a similar vein - global investing – a core focus area for Sasfin Wealth, is just as challenging to unpack. As Wealth managers, Sasfin’s key objective is to take on a level of custodianship for our clients and their wealth. Investing is more arduous than ever before – clients don’t necessarily understand the nuances of exchange controls, choosing a trading platform or even the implications of offshore investing in general. Our duty is foremost to manage our clients’ money, but at the same time we want to empower our clients and ensure they understand exactly how and why they are investing in a particular asset class, through a particular platform. Constructing a sophisticated global balanced portfolio is critical to achieving long-term capital preservation. South African investors are now more easily able to invest across many global exchanges, which enables us to build solutions for our clients that are more diversified than if we were only able to select companies on the South African exchange. As Wealth managers, Sasfin’s key objective is to take on a level of custodianship for our clients and their wealth. Investing is more arduous than ever before – clients don’t necessarily understand the nuances of exchange controls, choosing a trading platform or even the implications of offshore investing in general. Where to from here in 2017 Today, more than ever, our clients are thinking globally about their lives. Sending children to offshore universities, opening up businesses offshore, or acquiring subsidiaries offshore are becoming part and parcel of the lives of many individuals. This is not just a South African phenomenon but a global one. Notwithstanding President Trump’s protectionist agenda, the world is more global than ever. This is reflected in the changing make-up of the JSE and the technology we use on a day to day basis. This new reality has major ramifications on how one manages his wealth. There are some key questions to ask: • • • • • What is your base currency? How do your assets match your future liabilities and income requirements assuming these are more global in nature? What are the chances that you or your dependents will want to either move abroad or spend more time abroad? What exposure do you have to South Africa in general (include your illiquid assets in this such as your house and business)? Do you have money to invest beyond savings to enable your current lifestyle? For most of our clients this line of questioning results in a need for much greater offshore exposure. Despite some rand strength over the last twelve months or so, this approach, particularly over the long-term, has yielded significant value to our clients over the last few years, especially as they view their wealth today more and more in dollar terms. Ultimately, we must view our lives, our wealth, and our future in global terms. During times of heightened volatility diversification becomes even more critical and is therefore especially crucial given the present economic climate, particularly given the ability for South Africans to invest globally, which provides far more opportunities in higher growth environments than ever before. By: Michael Sassoon, Head of Wealth and Capital 09 Rands and sense Build(ing) A sustainable future C ommunity Investment Holdings (CIH) is a 100% black owned, women led company with an investment portfolio in excess of R20 billion, diversified between healthcare, ICT, power & energy, logistics, mining and infrastructure development. Some of its premium investments includes Afrocentric limited (Medscheme), Temo Coal, Jasco Electronics Holdings, Tamasa Investment Holdings as well as property development interests. CIH last year celebrated its 20th anniversary. Our organisation is proud of this achievement, but is already planning for the next 20 years of sustainable growth, despite both world and regional economic instabilities. Growth opportunities are available for those organisations that are committed to meeting customer requirements, service excellence and the ability to understand their markets and evolve innovatively. Growth opportunities are available for those organisations that are committed to meeting customer requirements, service excellence and the ability to understand their markets and evolve innovatively. Develop Entrepreneurs, Develop An Economy Part of our business philosophy has always been to view ourselves as emerging from, and giving back to the community through all of its subsidiaries that participate in community projects through robust CSI projects. This emanates from our mission of making a tangible difference to South Africa. The company is committed to this ideal in a sustainable manner. CIH is well placed to cement government’s strategy regarding the support of “Black Industrialists”, and at the same time dispelling the negative narrative regarding B-BBEE. The amended Preferential Procurement Policy Framework Act (PPPFA) has created more impetus in government to support black entrepreneurs as well as transforming the economy in the way that participation is broadened in support of black Small Micro Medium Enterprise (SMMEs). The new B-BBEE codes will not only assist in developing SMMEs but will also encourage entrepreneurship and industrialisation within the economy. CIH supports these strategies through its B-BEEE goals and Enterprise Development initiatives, supporting the goals of the country and creating opportunities for today’s SMMEs who could be tomorrow’s industry leaders. Budget 2017: Sustainable Inclusive Growth The world is emerging from a tough 2016, with South Africa experiencing close to a zero percent growth rate. Furthermore, the country was faced with challenges such as severe drought, inflationary pressures and exchange rate fluctuations. The need for improved affordable education and reliable local services were also highlighted during 2016. Looking forward, South Africa requires a healthy economy, brought about by economic growth to satisfy our social aspirations. A positive rate of growth in output per head in the long run implies a sustained increase in the average standard of living of the population. Through sustained economic growth, our people will have the potential to access an increased range of goods and services, both in terms of quality and quantity, in so doing reducing the levels of poverty and unemployment. By: Dr Anna Mokgokong, Chairperson, Community Investment Holdings (Pty) Ltd 10 Rands and sense C ompiling the National Budget can be tedious, especially when they are read to the general populace and include a barrage of macro-economic issues, socio-political issues and only finally the financial issues. In general, most people do not follow the detail and wait to be told, the day after, what it means – often in tables as to how much more tax they will have to pay, from personal income taxes to sin taxes to fuel levies. Actually, while relevant, that is also very boring. One of the most exciting budgets in recent history To better understand the predicament faced in putting the Budget together, it is worthwhile to try to put yourself in the shoes of the Minister of Finance and see how much leeway he has and how some decisions may be forced upon him. Of course, we do not have access to the information that he has, nor the models of the National Treasury, but we can undertake a bird’s eye view. Remember that while we are all interested from a personal perspective, the policies and intended actions that are announced can have a dramatic effect on the way that markets react. In particular, we know that the ratings agencies watch the Budget very closely. So far they have been favourable towards the way that South African fiscal policy has been handled, singling out National Treasury as one of the institution’ that has saved SA from junk status. This year, Minister Gordhan will have a much easier time of it. Last year, not only had he just been appointed but a few months before but he also had to deal with an attack from the Hawks. A the time, the main point was to convince the ratings agencies that SA was committed to fiscal prudence – and in a very tough time with company tax receipts falling sharply. Unpacking The 2017 Budget By: Liston Meintjes, Investment Professional 11 Rands and sense Tax changes ahead? Minister Gordhan still has to deal with a very lop-sided structure to Personal Income Tax (PIT) which is the top major contributor to the total tax take, accounting for more than 30% of the total. Of this, it has been shown that a mere 800,000 individual tax-payers account for 80% of that, or 24% of the total. On the other side, governments have a duty to assist the poor, underprivileged and those in need of care. In South Africa, the number of people receiving a benefit is just short of 16 million. If you were the Minister, how would you try to remedy this? Two other bits of good luck have made this Budget easier: a record maize harvest this year instead of one of the worst droughts last year and a recovery in commodity prices, so that companies that made losses or very small profits will be paying tax. In assessing this latter impact, though, please note that corporate taxes are only about 20% of the total. VAT has always looked like the easy way to get extra tax revenue. What is the difference between 14% and 15%? Probably in the out-turn, nobody would notice, yet there is a strong reticence to changing it: it would add to inflation, it is highly visible and most likely to receive opposition, mainly from unions and, in any case, word has it that the VAT increase will occur to help pay for the National Health Insurance scheme when it is introduced. So, looking at estimates for the revenues from the top three area’, for PIT, unless there are changes in the tax-rate, we can pencil in an increase of 9%, made up of salary increases and promotions. Of interest, and a comment from Treasury, PIT has traditionally shown what is known as tax-buoyancy (meaning that it nearly always come out better than estimated) but not so in the current tax year, which may impact the actual deficit against that which was budgeted. Remember the deficit to GDP ratio is one that the ratings agencies watch closely. The Budget was for this ratio to be 3.2% this year and 2.8% for next year. That drop is going to be the difficulty in this Budget. For VAT, the estimate is usually last year plus inflation, say 7% because some segments of the basket of goods for CPI do not attract VAT. The estimate for company tax must rise but just by how much? To be prudent, lets us say 10%. There will, for sure, be differences in increases in the estimates for the rest (including sin taxes that usually get a disproportionate amount of media space) but let’s say 8% overall. 3.2% 2.8% Budget to GDP ratio 2017 Budget to GDP ratio 2018 The challenge in estimating Expenditure The next step is to estimate expenditure: on the one hand this is easy because government has control over it: non-essential projects can be shelved. The reality is, as one former Chancellor of the Exchequer in the UK said, “It is a tug-of-war between rival spending departments.” That is where the Medium Term Budget Policy framework comes in. No longer is the budget an annual event but part of a rolling three-year cycle. Remember the deficit to GDP ratio is one that the ratings agencies watch closely. The Budget was for this ratio to be 3.2% this year and 2.8% for next year. That drop is going to be the difficulty in this Budget. Last year the emphasis was on maintaining capital projects that would aid growth – remember that the ratings agencies keep stressing that the missing ingredient in South Africa is growth. As we all know, this has been dismal locally for a number of years and, for many of us, doubts exist as to whether we will see some of the previous 4%-5% years again. If you were Pravin Gordhan, what would you be doing or saying about this? Several times during the course of 2016, the Minister quite openly said that it could not be achieved by government on its own and pleaded for assistance from the private sector. He also said that as a result of the desperation to avoid junk status there was now the closest working relationship between government, labour and business since the 1990s and that a number of initiatives were already under way. No doubt he will reiterate his plea and stand proud in the progress of the initiatives. One major item under discussion to reconcile this year’s budget is the funding of the State Owned Corporations (SOCs). The ratings agencies will need this. A major change has already taken place: a multi-party committee has been set up under the Chairmanship of Cyril Ramaphosa to ensure proper governance of the SOCs. This extends from the criteria for Board appointments to the policing of funding. It may not be a new mantra but it is now established – the Minister makes policy and the SOC implements it. This may be late but it is welcome and it should assist the Minister in his endeavours to keep the ratings agencies happy. The real question facing the Minister is whether he can stick to the deficit to GDP ratio when GDP is hardly growing and if so, can he do it without the sale of at least one SOC? This is a political hot potato, so watch this space. Get It Right The First Time Bernard Du Plessis and Peter Dachs are executives and joint heads of ENSafrica’s tax department. Bernard Du Plessis executive and joint head of ENSafrica tax department. T axpayers often call on us to assist them with the South African Revenue Service’s (SARS’) dispute process. Quite often, this is at a fairly advanced stage, after the client and its tax advisers have submitted objections and appeals. Getting legal assistance at such a late stage may jeopardise the ability to salvage the process, especially if the taxpayers or their tax advisers don’t formulate and state their case properly. Unpacking The Sars Dispute Process Falling into this trap could prove costly for a taxpayer in the latter stages of a dispute, as the grounds of objection and appeal may not have been formulated appropriately for the case that the taxpayer wishes to advance in court. Once the grounds of objection and appeal have been formulated, it is extremely difficult to amend a defence, because while existing grounds can be elaborated on, they generally cannot be changed. For this reason, it is extremely important that the grounds of objection and appeal are formulated correctly the first time and that the taxpayer states its case comprehensively. In terms of the dispute process, SARS requests information and the taxpayer and its advisers prepare responses, which result in a chain of correspondence around the questions raised by SARS, information it has requested, or contentions it has advanced in the course of the audit or subsequent correspondence. This often leads to the objection and eventually the appeal. The grounds of objection are then formulated effectively as a rebuttal to SARS’ contentions and the taxpayer often omits to independently formulate and state its case. In terms of the dispute process, SARS requests information and the taxpayer and its advisers prepare responses, which result in a chain of correspondence around the questions raised by SARS, information it has requested, or contentions it has advanced in the course of the audit or subsequent correspondence. This often leads to the objection and eventually the appeal. The grounds of objection are then formulated effectively as a rebuttal to SARS’ contentions and the taxpayer often omits to independently formulate and state its case. 13 Rands and sense Falling into this trap could prove costly for a taxpayer in the latter stages of a dispute, as the grounds of objection and appeal may not have been formulated appropriately for the case that the taxpayer wishes to advance in court. Once the grounds of objection and appeal have been formulated, it is extremely difficult to amend a defence, because while existing grounds can be elaborated on, they generally cannot be changed. For this reason, it is extremely important that the grounds of objection and appeal are formulated correctly the first time and that the taxpayer states its case comprehensively. The Value Of Valid Evidence For example, where the existence of a commercial purpose is important to dispel contentions of a sole or main purpose to avoid tax, the taxpayer could advance commercial reasons and state the need to have created a specific structure or transaction for commercial purposes, such as to be closer to customers, to have a presence in a country to enhance sales and be more competitive, or to centralise certain group functions. In assessing evidence, one may then find memoranda (often drafted by the tax department or corporate finance department) that neatly sets out the commercial reasons for establishing a structure or practice, which, on the face of it, looks like good supporting evidence for the arguments advanced. However, when a detailed assessment of evidence is done and no relevant correspondence is found in the commercial departments reflecting similar needs or requests, and no decisions have been made by the commercial departments to request the establishment of such structures or practices, this becomes problematic. Here, the absence of evidence from the commercial departments is in itself problematic, but together with the constructed defence of the taxpayer’s inhouse tax team or advisers, this amplifies the likely purpose of the structure to have been tax driven. On the face of it, what initially looks like a good argument, supported by contemporaneous supporting documents, could then, at a late stage in the dispute, turn out to be an unsustainable or difficult position to defend. This example illustrates the need to develop a comprehensive and sustainable legal defence early on in any tax dispute process. This requires the involvement of specialised tax defence lawyers in any tax dispute process, especially given SARS’ aptitude to push dispute matters towards litigation. Receiving a distress call for assistance at a later stage may be too late to rescue the matter Peter Dachs executive and joint head of ENSafrica tax department. 14 Rands and sense Achieving an Impossible balance By: Bradley Mitchell, Head of Research, Sasfin Wealth By: Mike Haworth, Investment Strategist, Sasfin Wealth By: Alec Abraham, Senior Equity Analyst, Sasfin Wealth So how about cutting back expenditure The 2017 National Budget appears to be a slightly less demanding exercise than in 2016 on signs of a moderate, but still sub potential, rebound in growth. However, it is important to note that this expected improvement in growth is being driven by factors that are out of government’s control; namely higher commodity prices and a dissipating drought. Sadly, opposing factors, many of which the government has influence, remain potential impediments to achieving and sustaining much needed higher growth. This growth imperative remains crucial to offset the deficit imbalance that continues to face pressure from increased current expenditure as a result of factors such as the growing social spending priority. The main factors that would make the task of fiscal consolidation even more of a headache for National Treasury include the following: • Sustained low growth; • Execution risk; • Policy uncertainty; and • ZAR disruption. Current Budget Position 1.3% In the latest South African Reserve Bank (SARB) monetary policy statement, a set of assumptions were provided, one of which was the estimated potential output growths. 20161.3% 20171.4% 20181.5% The concern is that these are still very low growth rates and suggest a serious erosion of South Africa’s potential output growth in the last few years. More importantly, it implies that monetary policy is not as accommodative as it appears at first glance. The potential growth rate and related output gap form an integral part of the price formation process in the South African economy. The output reflects the degree to which activities and processes in the economy are under pressure from excessive demand and thus generating inflation, or alternatively, under-performing and thereby pointing to reduced inflationary pressures. 1.4% 1.5% Estimated potential output growths for 2016 Estimated potential output growths for 2017 Estimated potential output growths for 2018 15 Rands and sense Revenue Growth The three largest components of national government revenue are personal income taxes (37% of national tax revenue), company income taxes (17% of national tax revenue) and ValueAdded Tax (VAT) (25% of national tax revenue). These three components contribute 80% of the national government revenue. Total revenue growth for the fiscal year to date to November 2016 slowed to 7.1% year on year from 11.1% in the prior comparable year. This growth was largely derived from a 9% increase in personal income and capital gains taxes, the largest contributors to total taxes, while company taxes increased by 4.1%. This suggests that the national government revenue imbalance persists. Medium Term Budget Adjustments In the MTBR, National Treasury lowered its revenue forecast for fiscal 2017, but a much lower consolidated expenditure reduction resulted in the main budget balance deficit to still increase to 3.4% of GDP. Main budget balance deficit to increase by R8.7bn to R165.0bn With this ongoing deficit, National Treasury highlighted the need to institute consolidation measures. We continue to believe that Treasury will aim to achieve this through proposed tax increases combined with expenditure cuts each year through to 2019. A concerning feature in the revenue mix is the decline in taxes on payroll and workforce due to minimal job growth and a changing job mix. Even more troubling was the very low growth in net VAT revenues up only 4.5% to R180.78bn. The fundamental growth driver for tax revenue growth is personal income taxes. As the National Treasury looks for more revenue to compensate for low company and VAT tax revenue (this year a R23bn revenue shortfall) it is planning additional tax increases each year through to 2019. These increases are over and above the R15bn announced in the Feb-2016 budget. Budget Targets In the MTBR, the expenditure ceiling was budgeted to increase by a compound rate of 7.5% per annum over the next three years. National Treasury has progressively lowered this expenditure ceiling in nominal terms. The expenditure ceiling is the non-interest spending financed from the National Revenue Fund and is one of the key metrics watched by the international rating agencies to ensure that SA maintains fiscal discipline given the low growth and changing political bias. Revenue Growth The three largest components of national government revenue are personal income taxes (37% of national tax revenue), company income taxes (17% of national tax revenue) and Value-Added Tax (VAT) (25% of national tax revenue). These three components contribute 80% of the national government revenue. Total revenue growth for the fiscal year to date to November 2016 slowed to 7.1% year on year from 11.1% in the prior comparable year. This growth was largely derived from a 9% increase in personal income and capital gains taxes, the largest contributors to total taxes, while company taxes increased by 4.1%. This suggests that the national government revenue imbalance persists. A concerning feature in the revenue mix is the decline in taxes on payroll and workforce due to minimal job growth and a changing job mix. Even more troubling was the very low growth in net VAT revenues up only 4.5% to R180.78bn. Bradley Mitchell, Head of Research, Sasfin The fundamental growth driver for tax revenue growth is personal income taxes. As the National Treasury looks for more revenue to compensate for low company and VAT tax revenue (this year a R23bn revenue shortfall) it is planning additional tax increases each year through to 2019. These increases are over and above the R15bn announced in the Feb-2016 budget. 16 Rands and sense Expenditure growth Against the background of a non-interest expenditure ceiling, which was introduced in 2015 as an overt measure of fiscal consolidation, noninterest expenditure rose 4.5% in the year to date to November 2016. The State debt cost was up 16.5% year to date to November 2016 on the back of continued rising net debt levels. Debt levels in september 2016 Fiscal consolidation Domestic debt The National Budget now allocates revenues exceeding R1 trillion per year. Yet the quality of spending needs to be improved. Too much public spending is regarded as wasteful, too much is ineffectively targeted and too little represents value for money. The Medium Term Budget Policy Statement (MTBPS) proposes to narrow the budget deficit and stabilise debt. This policy of fiscal consolidation is designed to prevent rapid capital outflows and their consequent economic disruption, which would set back transformation, and lead to higher unemployment and social distress. +R144bn to R1,963bn National Treasury is attempting to balance the consolidation between higher taxes and lower expenditure growth. Proposals include a combination of tax policy measures that will raise an additional R43 billion over the next two years, and reduce the expenditure ceiling by R26 billion. These steps compound on consolidation measures announced in the 2015 and 2016 Budgets. Social spending is still getting priority. 44.8% of GDP Foreign debt South Africa’s gross public debt stood at R2,156bn in September 2016, equivalent to 49.2% of GDP. When public sector cash balances are netted off the net public debt level was R1,954bn, equivalent to 44.6% of GDP. -R7bn to R193bn 4.4% of GDP 17 Rands and sense Expenditure over the period 2017 to 2020 Health Human settlement and municipal infrastructure +8.2% Social protection +8.0% Post school education and training +8.2% +9.0% The lowest expenditure increases are in general public services up 4.1%, agriculture, rural development and land reform up 4.8% and economic affairs up 4.9% over the period 2017 to 2020. The consolidation measures proposed in this MTBR are likely to have some dampening effect on economic activity. But the alternative over the medium term would likely be a further loss of confidence and a ratings downgrade, which could trigger higher interest rates and large capital outflows. The latter’s risks are greater risks to the economy than the likely effects of fiscal consolidation. Risks Sustained low growth Sustained low growth will force National Treasury to make more difficult allocation choices as its current payment demands overwhelm the tax revenue received. This will compromise government’s capital expenditure objectives and plans. It will also put increasing pressure on National Treasury’s budgeted main budget expenditure ceiling. Personal income tax growth is likely to come under pressure as corporate SA are likely to find it increasingly difficult to pay 8% per annum nominal wage growth when corporate gross operating surplus growth is as low as 4% per annum. We estimate the population of SA’s major urban areas to be growing at a rate around 5% per annum,made up of 1.7% population growth and the balance the urbanisation rate. With a high urban population growth rate and low economic growth, minimal employment growth can be expected. Therefore, urban social demands do not go away when there is low growth, rather the social protection needs escalate. National Treasury continues to increase personal taxes at the high end of the income spectrum and the marginal tax scale continues to steepen. Indirect taxes, rate and taxes and utilities are all set on steep sliding value and usage scales. The progressive taxation (direct and indirect) will disposable income of the higher income groups will come underpressure which will impact consumption growth. In the latest Quarterly Establishment Survey to Q3:2016, formal sector community services and personal services employment (most of which is public sector related) compensation growth was 10.4% YoY in Q3:2016, slowing to 8.5% YoY in Q3:2016. Alec Abraham, Senior Equity Analyst, Sasfin Wealth 18 Rands and sense Execution Risk The main execution risk lies in wage growth. In this regard, the expenditure ceiling has limited the hiring rate of public sector employees. This may be easier to control in general administrative positions but the growing urban population is placing greater pressure on police, security, healthcare, education and social welfare staffing. The largest inflation-linked expenditure is wage growth. The key risk therefore lies in the under estimation of inflation which could result in demand for higher wage growth. Policy Uncertainty Cabinet changes and politicking have been undermining National Treasury’s effectiveness in the last 18 months. Rumours abound that the President is about to reshuffle his cabinet again. The rumours linger that the ANC leadership want to remove the Finance Minister Pravin Gordhan. The attacks on Gordhan by the New Age and ANN7 media, calling him a “White Monopoly Capital” stooge, have intensified and have been reinforced by opinion on his attendance at Davos in January 2017. In November 2016, the deputy finance minister Mcebisi Jonas was quoted in the Public Protector’s State Capture report that he had been offered R600m by the Guptas to become Minister of Finance. Deputy Minister Jonas together with other senior politicians in the National Executive committee are likely to be replaced after the revelations in the State Capture report. This could place Finance Minister Gordhan under more pressure from a new Deputy Finance Minister and the ongoing power struggle with the Head of SARS. The continued challenge by students using the “fees must fall” campaign has already contributed significantly to unplanned expenditure and this challenge does not appear to be fading. Contingent liabilities associated with the State-owned Enterprises (SOEs) including the Road Accident Fund (RAF). Government’s major explicit contingent liabilities are its guarantees. The guarantee facilities stood at R469.9 billion at the end of 2015/16, while the total guarantee exposure was R263 billion at the end of 2015/16, since several entities had not fully used their available guarantee facilities. The largest guarantee exposure – more than R170 billion – supports Eskom’s capital investment programme. An exposure of R200 billion relates to the IPPs. The contingent liability risk is high in PRASA, SAA, SABC, RAF but looks to be reducing in the Post Office, SANRAL and the Land Bank. South Africa’s Sovereign Credit Ratings Rating Agency Current foreign rating Current domestic rating Rating Outlook Rating Outlook Moody’s Investor Service Baa2 Negative Baa2 Negative Fitch Ratings BBB- Negative BBB- Negative Standard & Poors BBB- Negative BBB Negative Investment Information Inc. BBB+ Negative A- Negative In mid-January 2017, Standard and Poors Global (SPG) warned that South Africa’s credit ratings still hang in the balance. The economic growth trajectory still looks too low. The country’s rating being one notch above sub-investment grade leaves no room for error. SPG also highlighted that 2017 looked likely to be busy politically because the African National Congress (ANC) is heading for an elective conference which could result in changes in government. Further ministerial changes and increased litigation undermines policy implementation, which elevates the risk of credit downgrading significantly. Other risks such as “fees must fail” demands, persistent contingent liabilities in State Owned Enterprises and growing social support pressures look unlikely to abate in fiscal 2018. The international credit rating agencies repeatedly cite the strength and independence of its key institutions as a key factors protecting the constitutional base of South Africa and providing a backbone to the investment grade ratings. These key institutions are: • National Treasury, • The Auditor-General, • The Reserve Bank, • The Independent Electoral Commission, • The Public Protector, and • Judiciary and the courts. 19 Rands and sense ZAR disruption The continued and intense politicking around National Treasury raises doubts about its continued independence. The Reserve Bank is seen to be independent and that monetary policy is conducted independently to maintain price stability in the context of weak growth and is not a pawn in the State political power struggle. The Public Protector’s office has a new Public Protector in Busisiwe Mkhwebane who replaced Thuli Madonsela when her tenure ended in 2016. In the new Public Prosecutor’s first 100 days she has asked the police to probe the leaking of the audio recording of Madonsela’s interview with President Jacob Zuma and shelved the former Public Protector’s State Capture report. The independence of the Public Protector’s office is now in some doubt. This is reinforced in the timing of a preliminary report by Public Protector Mkhwebane provisionally finding that the apartheid-era bank bailout of Bankorp was unlawful and Absa Bank could be forced to pay R2.25‑billion to the fiscus. Absa responded describing the preliminary report as containing “several factual and legal inaccuracies” which distort the context and hence judgement. The judiciary is increasingly being overwhelmed by South African politics which is becoming progressively more litigious. While this is substantially boosting demand for legal and court services, it is placing an increasing financial burden on government expenditure and extending the courts case backlog. Both factors are eroding the judiciary system effectiveness. The latest court battle between the Guptas and Gordhan is a further distraction for the Finance Minister. Mike Haworth, Investment Strategist, Sasfin Wealth The strengthening ZAR is driven by yield seeking foreign portfolio capital inflows is likely to be disruptive given the very slow expected real growth and static or slowing nominal GDP growth in the South African economy in 2017 and the rising risk of increasing US protectionism and its negative influence on already slowing global trade. In Summary National Treasury’s task of lowering the budget deficit and slowing the rise in public debt to GDP continues to pose a challenge, particularly in the context of weak, albeit improving, domestic economic growth and growing structural imbalances. Even though the need for fiscal discipline in South Africa remains critical, the consolidation measures are likely to have some dampening effect on economic activity. But the alternative over the medium term would likely be a further loss of confidence and a ratings downgrade, which could trigger higher interest rates and large capital outflows. The latter’s risks are greater risks to the economy than the likely effects of fiscal consolidation In conclusion, faced with a plethora of risks that could upset the potential to reduce the budget and fiscal deficits, tax payers, particularly high income earners, will be forced to carry a greater portion of the of the deficit reduction burden. Overview Who should invest? Suitable for conservative investors looking for an after tax income greater than ZAR cash. Who does the fund work for? Taxable investors, including individuals, trusts and corporates. Key benefits of the portfolio: • • • • • Low risk Enhanced after tax return Current yield: 6% - 7% Daily liquidity Quarterly distributions Graphic illustration Sasfin BCI Optimal Income Fund vs Money Market The below graph depicts the compound effect of the after tax outperformance of the Sasfin Optimal Income vs Money Market. Assumptions: • • • • • 6.5% Return comparison R6 800 000 R6 700 000 R6 600 000 R6 500 000 R6 400 000 The fund can invest in a range of ZAR denominated, high yielding investment instruments including preference shares, bonds, money market instruments and debt instruments. R6 300 000 R6 200 000 • R6 204 124 R6 100 000 R6 000 000 R5 900 000 R5 800 000 Money Market Fund fees • R6 850 433 R6 900 000 What instruments can the portfolio manager invest in? • • • Investment amount: R5 000 000 Term: 5 years Current Sasfin Optimal Income yield: Current Money Market yield: 7.3% Tax Rate: 41% Optimal Income After tax yield comparison No initial fee No exit fee All yields quoted are net of management fees Annual management fee: A class – 1.5% (Excl. VAT) - individuals B class – 1.25% (Excl. VAT) - institutional Adviser fees are deducted separately as agreed with client 10% 4,4% 5% 6,5% 0% Money Market Disclaimer: • 29 Scott Street Waverley Johannesburg 2090 PO Box 95104 Grant Park 2051 Tel: +27 11 809 7500 Fax: +27 86 720 1258 Directors MEE Sassoon* RDEB Sassoon*# (*Non-executive #British) Optimal Income 21 Rands and sense Should you be investing locally? By Philip Bradford, Head of Investments, Sasfin Wealth 30 years ago two rand was worth approximately one US dollar. Currently to buy one US dollar, you need around R13.50. This means that if you had invested R100 000 into US dollars 30 years ago it would now be worth about R675 000; a gain of 575%! So in hindsight it was an obvious decision to take all of your money out of South Africa. Or was it? Unfortunately, as with most things in life, it is not that simple. The above calculation ignores the “8th wonder of the world”, compound interest. In fact, when including the interest in the two currencies the US dollar cash investment would now be worth R1 822 000 while the rand cash investment would be worth R2 530 000. So am I trying to suggest that you should keep all your money in South Africa? Definitely not. In fact the above scenario looks very different over the last 5 years where, because of sharp depreciation of the Rand, a simple investment in UD$ cash would have returned 88.6%! Therefore when someone makes such an important decision with their life savings, it is important to consider the facts: “Africa is not for sissies” From a risk perspective it doesn’t make sense to leave all your wealth in one country, even if it doesn’t have the political and economic volatility that we experience. The only necessary certainty in investing is diversification. It has nothing to do with patriotism; it is simply prudent to diversify across a variety of investments, currencies, companies and countries. “The world is your oyster” When it comes to investing in shares, why limit yourself to one local company if you could rather buy shares in some of the best companies in the world? The world is filled with opportunities and investors are now able to easily invest in a large variety of investments across the globe. This is particularly true of stock markets where it is now easy for our clients to access the biggest and best companies in the world from one account. In the past if you wanted to invest in oil, luxury goods and beverages you could only really buy Sasol, Richemont and SABMiller. Now you can also consider alternatives like Shell, LVMH (Louis Vuitton - Moët Hennessy) or Diageo. These global leaders are not only accessible, but are often cheaper than local alternatives. There are also industries and related companies that are not available in South Africa. Companies such as Google, Amazon, Microsoft and Apple don’t have peers on the JSE. These are some of the most valuable companies in the world and should be considered by any investor. In addition, the companies that are listed on the JSE are ever more expanding their operations internationally. It is estimated that more than 70% of the earnings of companies listed on the JSE are international. This means that even a “local” investment on the JSE is mostly “offshore”. Home town advantage There is, however, one advantage that South Africa has over first world countries which is ironically as a result of our relatively high inflation and political and economic uncertainty: high interest rates. Swiss investors that earn negative interest on their cash are envious of our local bond interest rates of over 8%. Local listed property companies can also offer good yields and better growth compared to foreign property equivalents. This is mainly because the local lease increments are linked to inflation which is much higher than in the developed markets. Therefore, carefully-selected local property companies can offer very attractive yields. In conclusion, it makes sense for South Africa investors to invest a portion of their assets in local bonds and property when income is required, where returns of over 10% are currently possible. However, when looking for capital growth they should investing in the best companies and industries in the world. Philip Bradford, Head of Investments, Sasfin Wealth DISCLOSING Undeclared foreign Assets in offshore Trusts By : Hannelie La Grange, Tax Associate, ENSafrica I n the context of trusts situated in foreign participating jurisdictions, the Common Reporting Standards (CRS) require the trustees to identify the settlor, beneficiaries and other natural persons exercising ultimate effective control (including through a chain of ownership) and report the necessary financial information in respect of those persons to the relevant foreign revenue authority. In the event that the said persons are identified as residents of South Africa, the reported information will, in turn, be automatically exchanged with the South African Revenue Service (SARS). The South African authorities have, with regard to the imminent reporting under CRS and the investigations surrounding the Panama Papers, provided an opportunity for non-compliant South African residents to regularise their tax affairs in respect of offshore assets under the Special Voluntary Disclosure Programme (SVDP), which commenced on 1 October 2016 and will close on 31 August 2017. It has, however, been questioned whether any alternatives to voluntary disclosure are available for South African residents with undeclared foreign assets in offshore trusts. SVDP – relief granted for tax noncompliance An application for relief under the tax SVDP may not be made by or on behalf of a trust. However, a person who is a donor (or the deceased estate of a donor) or a beneficiary in relation to a discretionary trust, which is not a resident, may elect that any asset situated outside South Africa, which was held by the discretionary trust during the period 1 March 2010 to 28 February 2015, be deemed to have been held by that person for the purposes of all tax legislation (including for estate duty purposes). The election contemplated above may only be made if the relevant asset: • • • Had been acquired by the trust by way of a donation or is derived from such a donation. Has been wholly or partly derived from any amount not declared to the Commissioner as required by the Estate Duty Act, 1955 or the income Tax Act, 1962. Has not vested in any beneficiary of that trust at the time that election is made. The South African authorities have, with regard to the imminent reporting under CRS and the investigations surrounding the Panama Papers, provided an opportunity for non-compliant South African residents to regularise their tax in respect of offshore assets under the Special Voluntary Disclosure Programme (SVDP) 23 Rands and sense As a result of this election, the trust will effectively be “transparent” for tax purposes, to the extent of the election made by the relevant person. Accordingly, the so-called attribution and distribution rules will not apply in respect of any income, expenditure or capital gain relating to that elected asset, during the time such asset is deemed to be held by that person. The relevant person would then apply for relief under the tax SVDP in respect of the elected asset. The relief provided would include the following: • The undeclared receipts and accruals will be exempt from income tax (other than employees’ tax) and estate duty in respect of any tax year ending on or before 28 February 2015. • No penalties for understatement will be levied. • No criminal prosecution will be pursued. However, an amount will be included in the taxable income of the relevant person in the 2015 tax year equal to 40% of the highest market value of the elected asset determined at the end of each of the 2011 to 2015 tax years (inclusive). The market value must be determined in the applicable foreign currency and translated to South African rand at the spot rate on the last business day in South Africa on or before the end of each tax year. In terms of the guidance published by SARS, the permanent VDP remains open for disclosures where it is argued that all or part of the funding of the elected asset is not taxable in South Africa or has already been taxed in South Africa. It has, however, been questioned whether any alternatives to voluntary disclosure are available for South African residents with undeclared foreign assets in offshore trusts. What are the alternatives? Hannelie La Grange, Tax Associate, ENSafrica The question has been raised whether, if the trust deed of a foreign discretionary trust in an early adopter country distributes the whole of its assets to a new trust in a fast-follower country in settlement thereof for the benefit of the existing beneficiaries and the first mentioned trust is wound up before 2017, for CRS purposes, the identity of the settlor of the original trust would not be reported in either jurisdiction. It may also be considered whether, if the trustees in an early adopter country retire and appoint new trustees in a fastfollower jurisdiction, this could have the effect of migrating the tax residence of the foreign trust, for CRS purposes, into another jurisdiction. The argument is that the outgoing trustees would not have any CRS reporting obligations in respect of the trust since its place of effective management will be located in the adopted jurisdiction. However, certain trustees hold a different view in this regard. Subsequent to the migration, the foreign trust should, in principle, be subjected to the information exchange procedures of its adopted jurisdiction. Navigating the maze of offshore trusts It is advisable for South African residents with undeclared assets in offshore trusts to have regard to the fact that the relief under the tax and exchange control SVDP will not be available in respect of offshore assets that have been disclosed to SARS under an international exchange of information procedure, such as CRS. Although offshore trustees may have differing views regarding their obligations in respect of the implementation of CRS in the relevant offshore jurisdictions, CRS will ultimately result in the offshore assets of South African residents being reported to SARS. The market value must be determined in the applicable foreign currency and translated to South African rand at the spot rate on the last business day in South Africa on or before the end of each tax year Don’t stagnate, innovate By David Shapiro, Deputy Chairman, Sasfin Securities A t Sasfin we have always comforted our clients by advising them that the JSE was more a reflection of the global economy than of the South African economy. Companies such as alcohol producer AB Inbev, global cigarette manufacturer British American Tobacco, resources giants such as Glencore and BHP Billton, luxury retailer Richemont and consumer conglomerates Steinhoff are still JSE loyalists, yet remain globally dominant businesses in their respective sectors. In terms of market capitalisation (value) 65% of the JSE is made up of companies that earn a major portion of their income offshore. If we consider that a number of our resource companies sell their product in dollars, the number moves up to 70%. At this point, the theory seems sound. Surely the JSE, which is dominated such influential global companies, is a mirror reflection of the global economy? Reconciling the lag But does the theory hold? When comparing the performance of the JSE with the S&P500 (a measure of US markets) in dollar terms the outcome is worrying. Over the past 5 years the S&P500 has outclassed the JSE by a staggering 84%. It is only when you analyse the composition of the two markets do you realise why the JSE has underperformed the American market by such a large margin. Let’s assess the composition of the ten most valuable companies in the US by market cap. These results are fascinating – this list predominantly comprises technologyfocussed companies. Innovative, forward-thinking and possibly precocious are some of the ways we have come to describe the likes of Apple Inc., Alphabet (Google), Microsoft, Amazon and Facebook. In fact, what is more astounding is that the top eight companies in the US today are spending as much on research and development in a single year as the total value of Naspers (nearly R1 trillion!) Obviously the steady rand depreciation has played a part in favouring the US market, but the JSE’s heavy exposure to offshore earnings cushioned most of that advantage Understanding the core difference The real reason for the JSE’s disappointment is that, with the exception of Naspers, the JSE is made up of “old economy” stocks. What sets Naspers apart is that the company has a major investment (34%) in giant Chinese technology player, Tencent. Apart from this, the JSE is heavily tilted towards old-school consumer stocks (AB Inbev, British American Tobacco, Richemont and Steinhoff), resources (Glencore, BHP Billiton, Anglo American and Sasol) and financials (FirstRand, Standard Bank, Old Mutual and Barclays Africa. This tells us that companies indigenous to SA are relatively stagnant, not innovation-driven and under serious pressure to hold their own against global competitors. Five of the top ten US companies are fastgrowing tech companies (Apple, Alphabet, Microsoft, Amazon and Facebook). The other five are Warren Buffett’s investment vehicle, Berkshire Hathaway, global oil giant, Exxon, investment bank, JP Morgan Chase, industrial enterprise, General Electric and pharmaceutical company, Johnson & Johnson. 25 Rands and sense Ten most valuable companies on the JSE by Market capitalisation in US$ 180,000 160,000 178,543 120,509 140,000 120,000 100,000 69,570 80,000 59,512 60,000 39,602 39,270 40,000 24,112 21,734 21,607 21,027 20,000 0 Ten most valuable companies in the US by Market capitalisation in US$ 700,000 600,000 500,000 630,885 562,235 485,959 395,830 383,688 400,000 369,283 357,777 312,045 300,359 276,273 300,000 200,000 100,000 0 Digging a little deeper The value today of a $100 dollars invested in the top ten South African shares and the top ten US stocks over the past five years tells it all. Eight of the top nine companies by returns delivered over this period are US-based. Again, it’s Amazon, Alphabet, Facebook, JP Morgan Chase, Microsoft and Apple Inc, with the sole local exception being Naspers (primarily because of the performance of Tencent.) The bottom line is that technology is enriching the lives of hundreds of millions of internet users. Each day they communicate, share experiences, consume information and seek entertainment – and it’s beginning to reflect meaningfully on earnings. The concern of investors several back was whether these ‘tech darlings’ could monetise their products and services. They have done so emphatically. Wherever we look, the statistics are superb – the global internet population has grown from 2.1 billion in 2012 to 3.4 billion in 2016. Over the next decade users could grow to 7.0 billion with China, India and Indonesia leading the way.E-commerce is projected to grow between 10% and 20% annually for the next 10 years, driven by growth, urbanisation and the rising middle class in developing markets. This explains not only the current dominance, but importantly for investors, the future strength of the technology sector. Returning to the original premise – how can our local businesses close the gap against their American counterparts? The answer it seems is to innovate, innovate and innovate some more. David Shapiro, Deputy Chairman, Sasfin Securities 26 Glossary GLOSSARY OF KEY TERMS CAPITAL EXPENDITURE CIT CURRENT EXPENDITURE EM FISCAL CONSOLIDATION FISCAL DRAG FISCAL POLICY GDP MTBR NDP PIT SME Spending on assets such as buildings, land, infrastructure and equipment. Company Income Tax Government expenditure on salaries and goods and services, such as rent, maintenance and interest payments. See also consumption expenditure. Emerging Market Policy aimed at reducing government deficits and debt accumulation. The effect of a progressive taxation system on the country’s economy. Policy on taxation, public spending and borrowing by the government. Gross Domestic Product Medium Term Budget Review National Development Plan Personal Income Tax Small and Medium Enterprise VAT Value Added Tax YTD Year to Date BUDGET SPEE CH L I S T T V B T E E L T S E X G O E Q A T I U F P E N P P R G S T A S I S F D A R T U R J H R L C S A K O A P N T R L G U A S S R P M C P L N I P I F F L R O A S C L R L O S Q T S M Z S J T T G A E F F L E I K T E M A T S R E N F O R E X I O R O U N K S L R S M R S U S V M A E P E F D O C S A L C T E M R V S U S B S I S H T T R M W C Y T E X P P E N D I R O F I T L I S H R T O O K E E Y M P I B A T T U R E G S S D Z D N S L L N O I T I L D J X H F G H K D Y B T J U S E I T I ALCOHOL AUDITOR BREAD CAPITAL CIGARETTES COMMERCE CONFIDENCE CONSUMER CONTRIBUTIONS CREDIT DEBT DEFICIT DISINVESTMENT DUTIES ECONOMY EXPENDITURE EXPORT FINANCES FISCAL FUTURE GDP E P Z T B A I L N T F A W A N S V U C G O I D R R C B W R L S N A Y C A U H E B U G A L W U D S G U T L U X S N D U S T R Y E O Q C G C A R C S I L AGENCIES G R N K E E P G O O D W I L T X O V E R D I M P I A L R F N L V Y C I N O W X J T L B A U O I M L U B I B H S E K C R V A F K N B N G U E S O R T I G O V E R N M E N T O I W C S X I C V E L A E N G A H S I L V V C J E V N E Z E N O U T I C E D A E R B H D N T S C J E O U E E O N H R E B M U N I N S X R B L R G S T T N O M L I Q E N E E M S I R A A M G Y E R O H S O N U M E R U R C F T Y D W O R K T T U I Z O T A W W D R T H I F N B S E R J I A K U P C C E O S Y Q S L S D D R E C R I U D E D S X N I M Q I I T E C O G M Y V A S G E I O S N T O O D Y T N N N D N E S E P I N A R G E T C O N S L N J T E I A P E A E A U U O D K F T C S R E I I X E T G G Z L I T R I Q N P I C F B U S C I V L O I S D I P M U H E E R Q S E S T V O H I B E N S T L N L S N E O V I E F T A P C S E N F P I F B C U M E X E S A D O V V O E L D S R K O R M I L A E G R U N L L C G M E P P B U R R E S T C N H Z I I C J E L I R N U T N E M Y A P L Z I T W E N M U I B V E E A H N I R Z R N S E Y D V Y R P A X D I E C L U K T V O D G E S D T E T T S H E R C C N E G O E I M O E E E S A T S R T S A E R C N I E S N O C A I X A T Y C R Q O B Y D N A L Q I O M C X B E T B W D W G C N W B T S C Z ASSETS GUARANTEES HIKE RESILIENCE IMPORT REVENUE BUDGET INCLUSIVE INCREASE SPEND INDUSTRY STABILITY CLASSES INFLATION INSIGHT STRENGTH INTEREST SUPPORT CONSOLIDATION INVESTMENTS ISSUE TRADE KNOWLEDGE TREASURY CORRUPTION LABOUR LANDBANK VALUE LEGISLATION VOLATILITY DECREASE LIABILITIES LOSS WORK MEASURES DOWNGRADES MINISTER NUMBERS RESERVEBANK OFFSHORE EQUITY ONSHORE OUTLOOK SHAREHOLDER PAYMENTS FEES PETROLPRICE POLICIES STAPLEFOOD PRESSURES FOREX PRIVATESTOCK PROFIT TAXES PROJECTIONS GNP PUBLIC RATES UNEMPLOYMENT RATINGS GRANTS RECEIPTS REFORMS WAGEBILL RESEARCH Money talks We listen Sasfin’s top-performing and award-winning funds offer you the kind of flexibility needed to create global wealth.Our investment solutions are uniquely positioned to give you worldwide reach, whatever your needs. 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