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Transcript of BCI Global Investment Conferencedocuments.efgroup.co.za/Documents/Boutique...Email:...
BCI Global Investment Conference
6th June 2016
Junaid Bray, CFA (Head of Equities)
"An investor initiative in partnership with UNEP FI and the UN Global Compact"
FAIS Accreditation: Junaid Bray (RE5) is FAIS accredited.
Compliance Officer: Ms Bontle Matlou FSB approved number CO 3407: [email protected]: Tel 021 670 6570
An African investment firm with global standards
Argon Asset Management (Pty) Ltd is
a registered financial services provider
The rand has been on a long-term downward trend
A substantial part of this depreciation has been during the last 5 years (<R7 to >R15)
RandLong-term downward trend
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Source: Bloomberg
Rand depreciation up to 23th May 2016
10 Years 5 Years 3 Years 1 Year
Depreciation 139.1% 125.6% 63.2% 31.5%
CAGR 9.1% 17.7% 17.7% 31.5%
USDZAR
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Investing is much more complicated than simply making a currency call. There are multiple
factors to consider such as
– The company’s business model
– Industry dynamics (supply/demand, regulation, growth, market structure, etc)
– Commodity prices
Rand hedgesNot all rand hedges are born equal
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Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Investing is much more complicated than simply making a currency call. There are multiple
factors to consider such as
– The company’s business model
– Industry dynamics (supply/demand, regulation, growth, market structure, etc)
– Commodity prices
Rand hedgesNot all rand hedges are born equal
4
Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Rand hedgesNot all rand hedges are born equal
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Source: Bloomberg
Investing is much more complicated than simply making a currency call. There are multiple
factors to consider such as
– The company’s business model
– Industry dynamics (supply/demand, regulation, growth, market structure, etc)
– Commodity prices
Argon Asset Management (Pty) Ltd is
a registered financial services provider
While one could argue that the bulk of recent index returns were generated by rand hedges (given
their heavy weights in the ALSI and SWIX), going forward you have to take a call on the rand to
determine whether the trend repeats itself.
ZAR fluctuation is often due to external global factors
– The rand is one of the most liquid currencies and is often used as a global risk instrument and
proxy for EM sentiment, especially during periods of heightened risk aversion.
– The rand is subject to underlying changes in the value of the US$
Extremely difficult to forecast the randExternal global factors often at play
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USDZAR vs US Dollar Index (Dollar vs Several Currencies) USDZAR vs Volatility Index
Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Long-term weakening trend
– Inflation differential
– Political risk
Credit rating downgrade
Extremely difficult to forecast the randArguments supporting a WEAKER rand
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USDZAR
Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Long-term weakening trend, but:
– After periods of sharp depreciation, the rand has strengthened for the subsequent few
years
– Slower US rate hike trajectory
Extremely difficult to forecast the randArguments supporting a STRONGER rand
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USDZAR
Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
The rand is one of the cheapest currencies in the world based on PPP
Credit rating downgrade already priced in
Extremely difficult to forecast the randArguments supporting a STRONGER rand
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ZAR – Purchasing Power Parity (Big Mac Index) EM Credit Default Swaps
Source: Bloomberg
Argon Asset Management (Pty) Ltd is
a registered financial services provider
Investment decisions cannot be based solely on companies benefitting from the tailwind of
currencies moving in their favour
Shares cannot simply be dumped into two buckets of rand hedges vs rand “dredges” - there are
much more complex factors to consider such as:
– The company’s business model
– Industry dynamics (supply/demand, regulation, growth, market structure, etc.)
– Commodity prices
Many shares that would traditionally be classified as non-rand hedges now have significant
offshore earnings, e.g. Supergroup, Retailers (Woolworths, Foschini, Truworths, Spar)
We take a bottom-up view on stock selection and therefore assess each stock from an individual
perspective in order to arrive at intrinsic value
Some defensive rand hedges trade at excessive valuations. Although their businesses are
defensive, investing at these levels may not be
Build a DIVERSIFIED portfolio of quality, well-run companies
Portfolio positioningFocus on bottom-up stock selection & diversification
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Argon Asset Management (Pty) Ltd is
a registered financial services provider11
FAIS disclosures
1) The intermediary
Argon Asset Management (Pty) Ltd (“ARGON”) is an authorised Financial
Services Provider; FSP no. 835
Physical Address:
1st floor, Colinton House Tel: +27 21 670 6570
The Oval, 1 Oakdale Road, Fax: +27 21 671 8252
Newlands 7700
2) Representative(s)
Name Qualification Experience
Junaid Bray CFA, B Bus Sc (Finance) , UCT 13 years
Category 1&2
Securities and Instruments: Money market instruments
Securities and Instruments: Shares
Securities and Instruments: Debentures and securitised debt
Securities and Instruments: Bond
Securities and Instruments: Derivative instruments
Participatory interests in Collective Investment Schemes
Deposit defined in the Bank act exceeding 12 months
Deposit defined in the Bank – 12 months or less
Fit and proper requirements
The Representative(s) comply with the fit and proper requirements per FAIS Act.
Responsibility for the Representative(s)
ARGON takes full responsibility for the actions of the Representative(s) carried out in
terms of the agreement concluded and has suitable guarantees in place, including
professional indemnity cover, amongst others.
3) Compliance Officer
Ms Bontle Matlou – CO 3407
Tel: +27 76 358 2693
Fax: 086 214 7356
E-mail: [email protected]
4) Key Individuals (responsible for the representatives):
Mr. Mothobi Seseli – Chief Executive Officer
5) Complaints handling procedure
Should you have complaints regarding advice given by the representative(s) or
their conduct, or any complaint relating to the services rendered by ARGON
please contact the Compliance Officer in writing at the addresses supplied in
section 1 or 3 above.
Upon receipt of a written complaint we will provide you with an
acknowledgement of receipt, within 48 hours and endeavour to resolve your
complaint as soon as possible. Should there be any delays in resolving your
complaint, we will advise you timeously.
If your complaint is not resolved to your satisfaction you may direct it, in
writing, to the Office of the Ombud for Financial Services Providers whose
details are set out below.
FAIS Ombud
PO Box 74571
Lynwood Ridge
0040
Telephone: +27 12 470 9080
Facsimile: +27 12 348 3447
E-mail Address: [email protected]
Argon Asset Management (Pty) Ltd is
a registered financial services provider12
Contact details
Luyanda Joxo, CFA Jeremy Jutzen
Head of Institutional Business Client Relationship Officer
Tel +27 21 670 6576 Tel +27 21 670 6592
Fax +27 86 674 1100 Fax +27 86 242 9958
Cell +27 84 701 1271 Cell +27 83 703 8523
Email: [email protected] Email: [email protected]
Cape Town Office Johannesburg Office
1st floor, Colinton House, The Oval 7th floor, Fredman Towers, 13 Fredman Drive
1 Oakdale Road, Newlands, 7700 Sandton, 2146
General Tel +27 21 670 6570
www.argonassetmanagement.co.za
Facebook page / argonassetmanagement
LinkedIn / argonassetmanagement
Insurance notification
We have Professional indemnity and fidelity guarantee cover in place to indemnify us against negligence, theft, fraud, errors and
omissions.