INVESTOR TALK
The world is
your oyster
G
iven that, South Africa’s gross domestic
product (GDP) decreased 0.6% in the first
quarter of this year followed by ratings
agency Standard and Poor’s downgrading of South
Africa’s foreign debt rating from BBB to BBB-,
worse than market expectations, many investors
are starting to turn their attention to investment
opportunities beyond our borders.
Starkly contrasted against this local backdrop,
investments offshore have certainly paid off for South
African investors, who have received returns of
around 35% due to strong performances in numerous
offshore markets as well as the depreciation of
the rand relative to the dollar, euro and pound.
Furthermore, experts expect that developed markets
(like the US) will outperform emerging markets (like
SA) in the next few years.
It is therefore not surprising that the 2014 Franklin
Templeton Global Investor Sentiment Survey found
that investors in South Africa and Italy showed the
greatest interest in investing abroad, with 85% believing
the best opportunities exist beyond their borders.
Beyond the difference in performance between
the local and offshore markets, there are numerous
other reasons why investors should consider offshore
investments. It is certainly one way to hedge against
the poor growth expectations locally and get in on the
stronger growth beyond our borders. It is also a hedge
against currency risk of a depreciating Rand and a way
to diversify an investment portfolio, spreading a nest
egg across several baskets to reduce risk.
Given the Rand’s freefall over the last couple of
years, investors may be concerned that they have
missed the offshore investment boat, given how
much less their Rands are now worth and the good
run offshore markets have already had. However,
there is a possibility that the Rand may depreciate
f urther and globa l market performance w il l
continue to impress but of course, in these volatile
times, the converse may prove to be the case. This
uncertainty only serves to underline the importance
of diversification.
Investing offshore is not without its challenges,
but opportunities abound. From the vast new
oppor t unities throughout A frica, the longestablished markets of the UK and US, and the
citizenship and residency programmes offered to
investors in Europe and the Mediterranean, to smart
new alternatives to traditional residential buy-to-let
in commercial property in offshore markets, investors
are certainly spoilt for choice, making thorough
due diligence and the right partners in the offshore
investment destination critical success factors.
Here to your investment success!
Monique Terrazas
EDITOR
“Man cannot discover new oceans unless he has the courage to
lose sight of the shore.” Andre Gide
www.reimag.co.za
Offshore Handbook 2014
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