Willis Towers Watson Asset Manager Review
IN THIS quarter’s Asset Manager Review, we look at some recent controversies affecting the South African investment landscape, and ask the investment managers for their views on these.
The new Mining Charter – the Broad-Based Black Socio-Economic Empowerment Charter for the SA mining industry – was published in June and caused immediate controversy. After the Chamber of Mines initiated legal action to challenge it, the Department of Mineral Resources agreed to suspend the Charter while the litigation is pending.
Amid the controversy, there was initially a sharp sell-off in mining shares, although these staged a significant recovery in July.
Also in June, the Public Protector made a rather startling intervention regarding the SA Reserve Bank’s inflation-targeting mandate, in her report on the apartheid-era bail-out of Bancorp, subsequently part of ABSA.
The Protector’s report directed Parliament to amend the Constitution, to remove the requirement for the Reserve Bank to protect the value of the currency. She implied that interest rate policy should move away from the independent Reserve Bank, to become a function of Government.
Although it quickly became clear that the Protector had over-reached herself and lacked the power to enforce a change in the Constitution, there was immediate debate as to the wisdom of such a radical change in monetary policy-making, and also whether the Reserve Bank was handicapping the economy by keeping interest rates excessively high. (Shortly afterwards, the Bank in fact announced a 0.25% cut in rates.)
Finally, the public debate about the need for “radical economic transformation” to challenge the entrenched position of “monopoly capital” (or “white monopoly capital” in some formulations) has generated much heat, but not a great deal of enlightenment.
In this regard we ask the question whether “monopoly capital” is