Now is the time for South African investors to consider investing offshore, according to Selwyn Kahl...
Now is the time for South African investors to consider investing offshore, according to Selwyn Kahlberg, head of offshore business development at Investment Solutions.
Kahlberg's belief is that the rand has become stronger than it has been for many months, so it is an ideal time for investors to diversify their portfolios geographically and acquire non-rand denominated assets.
He says: 'A well diversified portfolio would include equities, bonds, cash and alternative investments such as hedge funds, and should also include offshore investments in line with the approved SAR750,000 offshore allowance that South Africans are permitted. The problem is, investors are nervous right now in both our local markets and the international markets.
'Global equity markets continue to perform dismally and the medium-term outlook, not only for equities but also for global economic growth, is not encouraging. Global equities have declined by 35.6% in dollars in the year to date and if one converts that into rand, the decline is even worse at -35.2%.'
However, Kahlberg thinks global bonds have performed well this year, showing a 12.6% increase this year and a decline of only 1.87%. He expects further upside potential for global bonds.
It is also possible the government could increase the offshore allowance in next year's budget, making it easier for South Africans to invest more in foreign assets.
South Africa is changing its taxation and money laundering legislation to comply with legislation worldwide to encourage more investment in and out or the country.
Under the Taxation Laws Amendment Act 2002, South African investors from the beginning of 2003 must declare all foreign-held assets or face tax or even criminal penalties.
According to law company Sonnenberg Hoffman Galombik, complying with these standards will encourage investment in the country. Failure to comply can only lead to a reluctance on the part of the investment community to invest in South Africa.
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