Allan Gray unveils investment secrets

IN a breakfast meeting held at the Windhoek Country Club yesterday, Allan Gray Namibia revealed its investment strategies in these turbulent financial times.

It also took the opportunity to inform its clients about the potential impacts of the financial crisis.
The opening gambit of Allan Gray Namibia’s Managing Director Mbakumua Hengari in his presentation on the global economy was ‘global conditions are tough’ and he did not disappoint, rolling out figures that should make any economist quake in his suit.
Some particularly masochistic morsels were that total credit market debt in the US has increased to 356.2 per cent of GDP and that total retail sales there are down by 11 per cent.
With US$2,7 trillion in imports, which account for 6 per cent of global output and make it by far the biggest player on the world economic stage, Hengari said it was important to look to the US for guidance on how the crisis might unfold.
Moving on to local shores, Hengari predicted that Namibia’s economic growth would slow down to between 1,5 and 2 per cent, and that especially diamond mining and the tourism sector would come under pressure.
A major worrying factor in the mining sector is that some firms have not recovered even though the exchange rate has been weak, which usually stimulates exports.
Hengari predicts that ‘fiscal stimuli are going to become the order of the day’ and that ‘the public sector will become more prominent’.
This also means higher national debt as Government increases spending.
Moving on to specifics, Analyst Erna Motinga revealed some of Allan Gray’s investment strategies to multiply the N$10 billion in assets that it currently has on its books.
Motinga said its primary objective at the moment is to ‘preserve capital’ during the crisis.
The company has only managed to grow its local portfolio by 1 per cent in the first month of this year, compared to its average return of 23,7 per cent since its inception in 1999.
Eschewing the recent trend in the JSE of investing in resource companies, especially gold which is seen as a safe haven in trying times, Allan Gray has decided to move aggressively into financials and industrials.
Two of the companies spotlighted included SABMiller and First National Bank, the latter demonstrating the strong confidence the company has in the local banking sector.
On the international front, the company is looking mainly at Japanese stocks, somewhat surprising since Japan has just recorded the largest shrinking of its economy since the 1970s.
Motinga also revealed that the company had limited exposure to two banks involved in the sub-prime crisis in the US last year.
All in all the company’s international fund is down 2,1 per cent, still faring better than the FTSE world index which is dragging at 5,6 per cent.