Following Donald Trump’s shock win in the US elections, the world’s attention has shifted to what extent his proposed policies will be implemented and the implications for global markets.
This is according to Peter Brooke, Head of Old Mutual Investment Group’s MacroSolutions boutique, who believes that the world is entering a new, populist-led era, meaning a pull back from globalisation and a move towards more isolationist policies.
“From a financial markets perspective, Clinton was always the favourite as she represented the status quo – and markets like that certainty,” says Brooke. “Trump’s policies were less certain and as a result we expected a sell off following his win. A Trump win was predicted as being negative for trade and particularly bad for emerging markets, which are leveraged for trade.”
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Brooke believes that political shocks have become the new driver of volatility in the investment universe. “Of the major surprises in the last year, including Brexit, the Trump victory has been the most extraordinary,” he says. “His surprising landslide victory highlights the very strong desire for change and the inability of the elite to gauge the political climate,” adds Brooke.
“All around the world, populists are gaining on both the left and right. We believe this is a lagged impact of the global financial crisis which has resulted in very soggy global growth and rising inequality as central bank stimulus has helped the rich,” he says.
“We don’t think this trend is over and expect continued political uncertainty, moving to Europe as they start their calendar of elections.”
Brooke adds that a move away from globalisation and towards isolationist policies is bad for trade. “This hampers global growth and we expect the world to remain trapped in limbo with low growth, low rates and low returns,” he says.
Old Mutual Investment Group Chief Economist, Rian le Roux, highlights the short-term implications following the Trump election victory. “The presidential outcome has already had a negative impact on a number of emerging markets currencies – with Mexico being the worst hit – and those that could be affected by tighter US trade policies.”
However, the market probability of a US Fed hike in December has slumped to below 50 percent and the global search for yield may be strengthened in the short term, says le Roux.
“The rand is a high-beta currency, which means that it tends to be more sensitive to any moves against the dollar than other currencies, and this is likely to play out over the short term,” says le Roux.
“But, higher precious metal prices should provide some counter pressure.”
Still, le Roux adds that over the medium term the biggest risk to SA and the rand is if US fiscal becomes notably more expansionary it might lead to a more aggressive pace of rate hikes by the Fed, resulting in a stronger dollar, downward pressure on commodity prices and, hence, a weaker rand.
When it comes to US policy direction, le Roux highlights Trump’s position on fiscal expansion and tougher trade policies. “Promises are one thing, but actual implementation is quite another,” he says.
“What Trump will and can actually do remains to be seen. The global macro-economic impact is still unclear, including what this presidency will mean for growth, inflation and global policy settings over the longer term. But, the dust will settle over the next few weeks and comments from elected President Trump in the interim will hopefully provide some more clarity.”
Brooke points out that the threat of a demise of the European Union due to the rise in populist views, further propped up by the Trump win, will continue to be a market concern, causing ongoing volatility. “The Eurozone has a massive impact on the global trade market and any threat to this region will have far reaching market consequences.”
Says Le Roux: “Despite the increased uncertainty and hit to the rand overnight, our views on South Africa’s growth and inflation outlook remains largely unchanged. We still believe that inflation will soon peak and then fall in 2017, with rate cuts a possibility from around the middle of 2017.”
Brooke concludes by highlighting that the first step is not to panic. “Brexit taught us that buying shares in the initial sell off is a good strategy, as the market initially overreacts, and that investors should not believe forecasts, illustrated by the weak markets going into the election,” he explains.
“Unintended consequences have been an important lesson here – as political uncertainty grows in the developed world, emerging markets don’t reflect as badly on a relative basis. With the gold price rising and the oil price falling, South Africa has actually received a small boost.”
Start-ups Require A Strong Legal Foundation Webber Wentzel Ignite
Entrepreneurs, start-ups and scale-ups are a lifeline to South Africa’s economy.
Entrepreneurs, start-ups and scale-ups are a lifeline to South Africa’s economy. It is however a harsh environment and many entrepreneurs find themselves in a situation where they are wearing many hats and navigating potential pitfalls without the knowledge that many professionals have from years of experience.
This is especially true from a legal point of view where entrepreneurs are faced with real world regulatory challenges that could have far-reaching consequences on their fledgling business, such as financial regulatory, tax, exchange control and intellectual property.
A common example is that start-ups often forget to secure the rights and licenses they need to operate. For example, would you invest or partner with a company that:
- doesn’t have a legal right to use their brand
- doesn’t have proprietary technology; and/or
- is reliant on a third party agreement that doesn’t permit commercial use?
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These avoidable shortcomings often result in failures at critical junctures. The specialist legal services needed to avoid these problems are typically not easily accessible to start-ups.
With this in mind, Webber Wentzel has launched a project called ‘Webber Wentzel Ignite’ – a legal incubation programme that will provide selected entrepreneurs and innovators from any sector with:
- tailored legal services valued at up to ZAR 100,000;
- bespoke mentoring and training support – focused on legal knowledge and developing key legal skills relevant to start-up businesses; and
- targeted networking and profile-raising opportunities.
Video about Ignite
Webber Wentzel is not asking for equity or exclusivity; only an opportunity to connect and make a difference as a trusted advisor over the long-term. It is a wonderful opportunity that will set the selected entrepreneurs apart in the marketplace. Applications close on 15 January 2018
SMMEs So Much Focus On Funding, But What About Skills
A study by StatsSA which surveyed households and obtained evidence relating to skills development and unemployment between 1994 and 2014 showed the following.
I think we can all agree that the funding of small businesses is only part of the solution. What is possibly more important (as an enabler) is the initial assessment of the level and adequacy of skills existing within new or developing enterprises and to evaluate what further skills development or training is required to ensure a firm business foundation and sustainable growth is achieved.
A study by StatsSA which surveyed households and obtained evidence relating to skills development and unemployment between 1994 and 2014 showed the following:
- During this time frame across the South African working population of households there was an increase in skilled labour (21% to 25%), with a shift away from semi and low-skilled labour.
- What is interesting to note in the growth of skilled labour is the disparity within the different race groups.
*For the purpose of this analysis, the occupation types were used to infer skills levels based on the Quarterly Labour Force Survey. Skilled: manager, professional, technical. Semi-skilled: sales and services, clerk, machine operator. Low-skilled: domestic worker.
This is clear evidence that the role of enterprise and supplier development is a crucial one needed to up-skill and train the broader population. It is one thing to provide finance and access to markets, but without the appropriate skills development to make these investments sustainable is would be a fruitless exercise.
The role that the private sector plays in post investment business support and capacity building is incredibly important. There is a requirement to build both technical skills as well as overall business management skills. This in my view is when we will start seeing real impact. In order for the enterprises to be effective in the contracts that they are awarded a focus on skills development (by both parties) is required.
In an economy where growth has crawled to a near halt, SMMEs cannot be expected to be the holy-grail for job creation. Making an impact in increasing the potential salary earning or employable workforce is key and therefore skills development requires a multi-faceted approach:
- From early education phase – where emphasis must be placed at school level for entrepreneurship training and opportunities is a key enabler. Entrepreneurship should in essence become a career option to consider. Innovation must be incubated. The world is changing and the skills required to be productive are changing as well.
- Clear regulations and commitment to quality interventions should be stipulated at policy level to incentivise skills development/ skills transfer from large corporates to small businesses.
- Without looking at the bigger picture these developmental areas are without support – so a holistic approach to skills development – mentorship, networking and overall business acumen are skills that often distinguish between those who do well and those who don’t in business. It needs to all work harmoniously and as an effective and efficient ecosystem reliant on each other’s strengths and support and mutually beneficial objectives.
At the end of the day, an enterprise should leave an ESD programme empowered to stand and survive in the business world. We know that we are losing the challenge when time and time again we see developing enterprises moving from one ESD programme to another with nothing to show for it. Monitoring and evaluation of these enterprises is therefore also essential to track growth and success – but also to identify areas of weakness or need for further intervention.
At the heart of ESD is the notion that larges businesses/ corporates should move beyond compliance (aka box-ticking) and toward the heart of transformation. Intertwined here is the responsibility to use development interventions and activities in a deliberate and focused manner so that the skills level in small businesses can move upwards and ensure the longevity and success of growing enterprises.
Become The Number One Pitch Hustler With The ENGEN Pitch & Polish Programme
The ENGEN Pitch & Polish programme, hosted by Engen Petroleum Ltd and Nedbank, powered by Raizcorp and supported by national media partner, Caxton Local Media, is based on teaching entrepreneurs to present a winning pitch that is clear and focused.
The word “hustle” comes from a Dutch word that means “to shake things up”. Traditionally, the English word “hustler” was used to describe a dishonest person, who would do anything to make money. Hustling is, however, no longer a dirty word; nowadays, a hustler is someone who makes things happen. Hustling is about movement, activity and shaking things up in a positive way – the very things that entrepreneurs need to succeed!
Successful hustlers exist everywhere, and all entrepreneurs have much to learn from those who have mastered the art of the hustle! Whether they are building a business, selling a product or offering a service, hustlers focus on their goal and do whatever it takes to achieve the goal. Hustlers put in the hours and don’t waste time doing things that don’t contribute to their success in some way.
Hustlers grab every opportunity to pitch their business to potential funders and clients. They are seasoned pitch artists, and having secured the opportunity to pitch, know exactly what they want to say. Hustlers present a polished pitch! For this reason, the ENGEN Pitch & Polish programme, hosted by Engen Petroleum Ltd and Nedbank, powered by Raizcorp and supported by national media partner, Caxton Local Media, is based on teaching entrepreneurs to present a winning pitch that is clear and focused.
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“With us you are number one”, the headline sponsor Engen’s slogan, could just as easily apply to the hustler’s attitude towards his clients and business. Hustlers put their clients first. Their elevator pitch is ready to go and hustlers, always thinking on their feet, can adapt their pitch to meet the needs of different audiences.
Nedbank, a co-sponsor of ENGEN Pitch & Polish, encourages people to “make your money hustle for you”. Hustlers know how to do this. They think carefully about their pricing model, know how to calculate profit, and make their money work for them!
Hustlers do not give up when they hear “no”. They see rejection as an opportunity to be overcome, not a roadblock. At ENGEN Pitch & Polish, entrepreneurs are subjected to many “no’s” as they learn to perfect their pitches. Those who learn to use this feedback to their advantage – are the hustlers!
The pitch that was delivered from the heart, with the greatest ease, confidence, and precision – as well as energy and enthusiasm – were the qualities that caught the eye of the judges, and resulted in Bruce Diale, from Polokwane, winning the 2017 ENGEN Pitch and Polish programme, at an exclusive and prestigious event, held in Johannesburg, on 30th November. Bruce’s Agri-consulting business has developed, and patented, Gardenizly, an innovative vegetable gardening product, which is both water and space efficient.
This was not the only reason for his victory. “We chose Bruce as this year’s winner,” says Joe Mahlo, GM for Sales and Marketing, from Engen Petroleum Ltd, who was one of this year’s judges, “because he was clear on the value that his product and business will add to his clients and, indeed, to the world.” This is yet another indispensable quality of the hustler. Watch this space. A hustler has been born!
Second place was awarded to Refilwe Matsaneng, from Welkom, for her hair products business, GloLooks. Third place went to Renschia Manuel, from Cape Town, for her portable urban veggie growing boxes, GrowBox, business.
“It’s intimidating and unnerving to ask for money,” says Grace Govender, Head of New Business and Support for Relationship Banking, Nedbank. “To overcome this, entrepreneurs must focus on being properly prepared and authentic.”
To further help the entrepreneurs, Caxton Local Media, with over 140 publications, whose roots, too, are deeply embedded in the country, awarded the winner with R20,000 in advertising. “Caxton is firmly established in, and supportive of, local communities in South Africa and the partnership with ENGEN Pitch & Polish, along with Engen, Nedbank and Raizcorp, is a natural fit. We all believe in building small business, from grassroots up,” explains Dejane Poil, Head of Innovation at Caxton.
There was magic on the night as esteemed guests offered these three entrepreneurs further opportunities for growth and expansion.
ENGEN Pitch & Polish’s power lies in its ability to identify, through their pitch, the entrepreneurs that are number one hustlers. “These are the entrepreneurs who demonstrate the ambition to excel and the motivation to put in the work,” says Allon Raiz, the originator of the Pitch & Polish concept, now in its eighth year of identifying entrepreneurs who truly understand what it means to up the hustle!
For more information, visit www.pitchandpolish.com.
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