Nathalie Burrows, Editor at EBnet
This year’s CFA Conference in Cape Town blended an excellent agenda of content with great opportunities for connecting with industry friends and colleagues. The theme for this year’s conference was: Economic and Political Headwinds.
From the content point of view, I need to specifically mention:
Ronak Gopaldas: Finding clarity in chaos
This was no ordinary rhetoric from no ordinary political economist. Ronak took delegates on a global political and social tour, plotting the landscape investment professionals are currently navigating in their search for alpha.
It’s chaotic. Understatement much?
Ronak set the scene of a modern society that has replaced community with content, experiencing a perfect storm of multiple crises – which he described using a word coined by author Cory Doctorow: enshittification. (No you don’t have to read that again!) And we don’t have a playbook for this 5th industrial revolution of human-machine collaboration.
He unpacked the modern day issues under 5 T’s:
- Trust – Without a playbook for this new era, there are no rules, and no rules erodes trust.
- Trump – At their core, Trump’s policies have not changed since his first term as president, but the world around him has. Often viewed as a renegade politician, Trump is more demolition man than architect – eroding trust in the US as an ally or trade partner. Or is he a genius who is single minded about managing the US deficit? Depends on the day, I guess.
- Trade wars – And wars in general.
- Technology – Will Africa use technology to leapfrog itself into this new age or continue to lag behind others? And while Africa has all the minerals needed to build this 5th industrial revolution of digitisation, if we can’t fix potholes or get the wifi to work, then how can we expect to leverage our resources to advance our economies?
- Talent – In 2024 more babies were born in Nigeria than in the whole of Europe. When politicians are anti-immigration, where are these developed markets going to get their talent from?
Ok, so now what?
In a world where the centre of economic gravity is shifting, Africa wants to be at the table, not just on the menu. But we have a set of “wicked problems” that defy any standard attempt to find a solution. And with big cheque books coming in search of our minerals, this could be the perfect storm of opportunity. We will, however, need to write our own playbook to monopolise on this.
Panel discussion: Investing for growth in a post-tariff world
Moderator Nicola Comninos, Board Member of the CFA Society South Africa, facilitated a discussion around how the introduction of tariffs has broken barriers for South Africa (and the rest of the world) to have trading conversations with others.
The panelists, Sandile Malinga (M&G Investments), Rehana Khan (Ninety One) and Marius Oberholzer (STANLIB), agreed that South Africa is in an interesting place – we have all the characteristics of an emerging market without the growth. A debate of bonds vs equities ensued, with Marius making a pretty bold statement: “The capex build-out for AI is huge, if you’re not in equities, you’re going to cry”. I think I’ll catch up with Marius on EBnet.Stream to explore that comment a bit more.
With AI being described as the biggest trend in our lifetimes, Rehana encouraged investors to hold their thoughts lightly, and be prepared to pivot. Passive investing, anyone?
What are the asset allocation implications from a changing geopolitical regime?
What a privilege to hear from Juan Correa, Chief Strategist Global Asset Allocation at BCA Research.
Juan started off by making the point that multipolarity (an international system with three or more major power centres, each possessing significant influence and the ability to shape global affairs), not unipolarity, is the world’s historical norm. But nobody today has experienced a truly multipolar world, and that makes it scary. We’re used to the US-China show.
Juan opened my eyes with the sentence: Tariffs are not only a trade tool, they’re also a fiscal tool. When you put that in the context of the US’s intention to no longer fulfil the role of being the consumer of last resort, well, that almost makes tariffs palatable from a US economy, specifically their (growing) deficit, point of view. Maybe it’s less a case of US exceptionalism, and more a case of US realism? (It’s all in the packaging, isn’t it?)
This was yet another speaker who stressed the opportunities that exist for Africa in the new world order. And it was difficult to not be optimistic about what a future for this continent could look like.
It’s impossible to summarise such a great day’s content into an 800 word article, but the bottom line is this: CEO’s and investment professionals need to master the politics if they’re going to add value.
Kudos to the CFA for hosting such a though provoking, belief challenging, paradigm shifting conference, with discussions led by global thought leaders.
ENDS
