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Investor report and newsletter for the second quarter of 2022

The past 30 months or so have seen markets going on a turbulent rollercoaster ride. From COVID-induced lockdowns and supply-chain disruptions to central bank quantitative easing, increasing liquidity in the global financial system. During the latter part of 2021, fortunes were reversed, and tailwinds became headwinds. Companies that had experienced significant operational benefits from the COVID pandemic have seen their share prices come down to pre-COVID levels, even and below. On the other hand, those companies that had been negatively impacted operationally by the global pandemic have seen their share prices being re-rated. The median share price of the Nasdaq is down 70%

For now, all eyes are on rising inflation and interest rates hikes, both globally and in our domestic markets, Inflation is peaking. The supply-side disruptions that impacted on commodities, including oil, metals, and grains, and high shipping costs have abated. While some of these prices remain high, they are no longer rising to force inflation higher. In addition, demand for goods and services is slowing, partly due to higher prices, and spending is no longer supported by subsidies and easy monetary policy. How central banks navigate inflation lower while sustaining economic growth is the key question and time will tell.

The financial markets are volatile, a reflection of the global uncertainty about inflation, interest rate hikes, labour conditions, supply chain challenges and the ongoing war – the real economy. How businesses now adapt to the changes will be key to their performance. The environment demands that valuation frameworks need to adjust away from cheap money. This may take time and volatility may be the order of the day as we adjust to historically higher inflation and lower growth. Companies with solid balance sheets, pricing power and the ability to generate cash flow are favoured.

Most asset classes are down this year – “the worst first half since 1970”. The outlook remains uncertain, and we do anticipate further volatility in the short-term. However, how much of the bad news is priced in? Global fixed income offers positive yield for the first time in years. Global equities are reasonably priced, and more and more investment opportunities are becoming compelling. Domestic equites and bonds are cheap, reflecting the many economic challenges we face – power cuts, corruption, unemployment, and unrest. Patient investors will be rewarded from current levels.

It has been a rough time in the markets. It certainly is unsettling. More importantly, now is not the time to panic. Rather use the time to sit back and reassess. Ensure that you have the optimal asset allocation based on your investment horizon and financial requirements. A well balanced and broadly diversified portfolio is crucial, particularly during times of uncertainty and volatility.

Our long-term bias in the portfolio allocation of our clients is to equities where relevant. Over time, equities outperform most investable asset classes available and more importantly provide real growth in the long-term. This holds true both locally and globally. During periods of expected recession, this changes and markets will fall. In time, this provides an opportunity to re-invest.

We continue to aim to be the wealth manager of choice for high net-worth individuals seeking tailored investment solutions and top-tier advisory services. We see an abundance of opportunity for investors in both local and offshore markets, and we are looking forward to sharing those opportunities with you.

The table below highlight the performance of selected markets and asset classes to 30 June 2022.

Thank you for your interest and ongoing support.

We welcome any feedback or questions.

Kind regards

Oliver, Ulf, Vanessa and Warren


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