Go offshore for growth
Lynette Dicey
Global markets continue to be more attractive than the JSE, writes
n the current environment, investors need to do their homework and ensure that the companies they are invested in are equipped to survive, says Sasfin Wealth’s Andrew Padoa.
Successful companies such as Activision Blizzard, Alibaba, Alphabet, Microsoft and Samsung all have large cash piles and low debt levels, and have outperformed the S&P 500 year to date. “While the sectors they operate in have benefited from a global lockdown, their resilient balance sheets and cash positions mean they will be able to survive and buy
IAndrew Padoa … quality companies
attractive companies that are in distress,” he says.
Predicting that the global economy will recover faster than SA’S economy, Padoa says consumers’ financial positions will only get worse the longer the country is in lockdown. Exacerbating the situation is the fact that the SA government’s stimulus packages are limited.
Global equity markets, he says, continue to be more attractive than the JSE. “We’d rather be able to choose from more than 40,000 listed companies in offshore stock markets than fewer than 400 on the JSE. Some of these companies, including those in streaming, e-commerce, health products and technologies, automation and robotics, are involved in exciting technological trends that are driving growth and changing the world. The JSE has very few companies involved in these themes.”
Most pension fund and endowment managers in the US, UK, Europe and Japan require high single-digit returns to match future liabilities. These managers can’t put their entire portfolios into equities, and bonds in the developed world offer virtually no yield, says Padoa. The solution? Alternative asset classes such as infrastructure, private equity, gold, and selective real estate, including data warehouses and logistics, to assist investors in delivering the returns they require.
“Offshore global markets are currently a more attractive opportunity for long-term investors than the JSE, due to the greater number of highquality companies operating in growth sectors.”