Tag Archive for: Rand

Today’s blog is not scientific and will refer to little of the volumes that have been written on the subject of BREXIT. It’s just from the heart and a view of many things.

This much we do know – little of major significance in the world does not affect us on the Southern tip of Africa sooner or later and BREXIT is of major significance.

When last did you see the British Pound in the R18’s?

When last did a UKP asset like INTU [the Earls Court redevelopment] drop R17?

When last did the Pound not behave as a Rand hedge?

Well, the answer is when Britain decided to regain its independence.

I guess David Cameron will be known as the Referendum Prime Minister. Scotland decides to stay in the UK convinced that England would remain. Then the UK vote with a massive Scottish “remain” vote and the “leaves” outgun the “remains” by 1 million votes. Democracy has her day and the Scottish now want to re-vote for their independence and ties with the Europeans. What a see-saw!

Richard Branson admits his wealth collapsed by one third. Every property bought by South Africans over the past few years drops in value. Threats of recession, succession, and procession abound. Party leaders resign, and the world markets collapse. Big “remain” activists like Boris Johnson retract from the Conservative’s leadership race and, wait for it, the leader to be announced on 9 September 2016 will probably be a woman – watch out the Falklands, here comes Maggie Thatcher the Second. I think it’s going to take a woman to give effect to the succession from the EU – firm, fair, determined, iron fist in a velvet glove and most of all, charming, disarming and intelligent – great trade deals without the encumbrances of the European Parliament which has been costing billions of UK Pounds per annum.

So why does this entire hullabaloo affect us here?

First, it creates uncertainty which rattles the markets and stalls investments. Nobody likes uncertainty and the sense of being out of control. That’s the reason the markets collapse so dramatically in the face of a seismic [heard the word recently?] event. If the future is not seen as what it was, the market isn’t going to be what it was. Only those shorting currencies and stocks like volatility; the rest of us mere mortals want to know our pensions are safe. One reason why SA is so affected, or, affected like the others, is because we are so damn good – our communications, share trading, competencies and connections – both people and systems – are world class. In addition, we have limited foreign exchange controls so money moves freely and without cost, only controlled by exchange rate fluctuations. In many respects we remain a free market and that wins us many accolades. So certainty isn’t certain when you box with the world money flows.

Secondly, attention moves from Emerging to Developed markets. Developed markets, like your real, big brother, are the authors of knowledge, stability, reason and rational democracy. The biggest joke for me are those people who confess to voting “leave” just so that their leaders understood that there were some real issues with Britain and EU. Goodness me, how can you toy with the rest of the nation and think that your resistance vote would be lost to history – what a shock when you find the next morning that 16m other people actually wanted to succeed from Europe and didn’t care what the world thought of it! So, another Developed market causes eruptions to the common Man across the world. As if sub-Prime was not enough, we now have England threatening recession, according to some. And on the other side of the Atlantic, Donald Trump is taking on more and more meaning to the common Man of America. Love him or hate him, he has read a sense of nationalism and dis-integration in her people that he has harvested for the right to lead the Republicans into this year’s elections. One more Developed country is looking shaky to its core as her people grapple with “in” or “out” – this time, of the world. Then there are the Emergents – a big, little group of nations that are highly influential together in World affairs. Some of them, like Brazil, fast becoming a mess where there’s enough money and glamour to host an Olympics but not enough to kill the Vika virus. Then there’s Russia that seems to be flexing its muscles in many ways and directions. Great little nations economically, some of which are busting a gut to be good exporters to the Developed nations and many still succeeding to do so. To state the obvious for our beautiful Land, you really don’t want to be an Emergent country at this time and have a leadership that doesn’t have character and direction for the nation.

Thirdly, this too will pass. Let’s say that again: This too will pass. The markets have rebounded and taken stock of their over-reaction. To be specific, INTU has come back 10% in a week. This too will pass for South Africa and whilst we enjoy a little respite in the Rand/UKP exchange rate, it too will rise. Will Britain plunge the world economy into recession – no, I don’t think so. If the process of extricating itself from the EU takes two years, it could take 5 years. Five years to open up new opportunities, renegotiate new terms, save billions, have new countries come direct and avoid trade barriers. Can you really see London filled only with red-cheeked Londoners without the cosmopolitan hue of every other country’s populace walking in the streets? Can you really see London’s financial district being allowed to become a ghost town? I don’t want to sound trite, but England, with or without Scotland, will survive and prosper and recover her ability economically if she has lost anything anyway. What is important in all of this is that people understand the global village and our inter-connectedness as nations. Boundaries are the institution of countries and treaties, the right of people to move is nearly inviolate. South Africa has learned this lesson and will continue to learn it as long as Africa sees we have more to offer – good or bad, I prefer not to comment –  but will it continue to happen? Absolutely! Such is the British and European reality.

There is so much more to say. We will experience some discomfort but hopefully in our presently well-managed economy, the bad will be offset by some strengthening of the Rand and a lid put on the fuel price, for instance. But nothing can take our focus of the national imperative to create growth and jobs for our young people through good education and unrestricted opportunities.

Remember to control what you can and stop worrying about the rest – all the worry in the world could not reverse the BREXIT decision so put your head down, keep your eyes on the road to property sales and be all you can be; a role-model to those who know and respect you.

Yours in Property.