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It's My Money with Magnus Heystek · Strictly Business

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  A few weeks ago, I spoke to Magnus Haystack, founder of Brenthurst Wealth,
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  and he just concluded attending a conference in London.
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  which was hosted by 91, the asset management company.
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  And he said to me during the interview that ensued, he said
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  South Africa was mentioned only once during that whole conference.
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  Now he's been to the Biz News conference in South Africa, hosted by
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  Alex Hogg's organization.
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  And it was all about South Africa.
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  So Magnus is with me now.
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  And Magnus, it must have been mentioned a few more times, South Africa, because you
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  were looking at the ANC and its failed.
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  policies and the danger to South Africa.
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  How did it go?
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  You know, it was a fantastic conference.
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  It was now the second of what is called the Business Investment Conference.
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  So the focus was on investments.
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  But we did have, of course, politics runs throughout everything we do in South
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  Africa.
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  And we had a surprise guest speaker in
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  Andre de Raita from Eskom who is back in the country and he gave his views on Eskom
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  and how the government handled the whole Eskom thing.
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  And we had people like Dr.
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  Franz Cronier giving his views on South Africa.
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  And that was very interesting what he said.
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  You know, he's a scenario planner and an analyst, a very astute one.
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  And he talks about a balkanization of South Africa.
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  If things carry on the way it goes on.
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  In other words, SA breaks up into, not in a legalistic way, but in practical terms,
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  you'll have Joburg.
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  operating on its own in Durban or doing their own thing, and then the Western Cape
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  doing their thing.
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  But there was a lot of focus on investments into or out of South Africa.
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  And that was quite dramatic, the differences of opinion.
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  On the one hand, you had someone like Rob Hersoff, who's made a name for himself as
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  a very,
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  very hefty critic of the ANC.
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  Saying that, actually, the ANC has created a situation where South Africa,
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  north of the Western Cape, is uninvestable.
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  Land, commercial property, and it went on and on and on.
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  And on the other hand, you had fund managers like Petra Yoon who was saying,
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  and I think he was shared in that by Walter Ehler,
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  saying the JSC is extremely cheap and a fantastic opportunity.
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  and then you had the The Bitcoin guys, of course,
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  every year there's the Bitcoin guys just telling everybody how wonderful Bitcoin
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  is.
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  It was stimulating.
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  You don't agree with everything.
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  I was given the task to actually open the conference.
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  I wasn't going to take a position, but I made a comment and I built my little talk
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  about the fact that high net worth
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  South Africans can, since 2015, take significance.
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  amounts of money offshore every year, you know, up to 11 rand per person per year,
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  which means wealthy families could take out 22 million per year.
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  I said it was a good thing in many respects because a lot of my clients have
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  told me the
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  fact that they were able to create an offshore portfolio out of South Africa,
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  totally legally within the tax net, kind of assured them.
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  that there was no need to immigrate because by doing that, first of all,
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  I diversified from the South African stock market, which hasn't been doing well until
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  quite recently.
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  Secondly, the money is already outside of the foreign exchange net.
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  So once it's out of SA, it's out of SA.
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  And that actually leads to the situation where they're very comfortable to remain
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  in South Africa until the
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  end of their days, which was interesting.
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  And we had a debate about immigration and not immigration.
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  And I said, it's not the older people immigrating, it's the younger kids.
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  The kids with no assets, they're immigrating because they still want to go
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  and build a career somewhere else.
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  But the people who've got sufficient money, whether it's 50 million or 100
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  million, are saying, I've planned for the family,
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  I've taken out money.
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  If, when I pass away, that money does not come back to South Africa.
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  So in a very strange way, the decision 10 years ago...
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  Buy the ANC to allow more money to be exported.
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  That's actually...
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  benefited South Africa and and it's kind of made people quite more relaxed about
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  staying in South
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  Africa but the young people are still leaving if that's
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  I mean it's it's a broad statement you've got to get statistics to back it up but
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  that changes the demography
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  of a country I mean it changes the population pyramid rather and so all the
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  young people go you've got a lot of older
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  people that have got lots of money but eventually they die Okay.
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  And where does that money go?
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  I don't know.
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  Where does it go?
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  It goes to the people overseas already.
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  Well, that's my point.
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  That's my point.
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  The older people do die, but they're here in South Africa with their communities,
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  their friends, their families.
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  They don't have to go and immigrate, you know, just to get some capital out of the
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  country.
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  Yes, the youngsters are immigrating.
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  And over the last 30 years or so, almost a million people have officially immigrated.
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  And that's well documented.
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  I was reading Tony Leon's book, in fact, this morning where he discussed this.
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  And he actually said what you're saying.
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  The youngsters are leaving.
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  They're taking skills with them.
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  They may or may not come back to South Africa.
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  But the fact is, as a parent or a grandparent, you can say, if
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  Johnny or Susie doesn't want to come back to South Africa.
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  They have an estate already outside of the country, which is the point I was trying
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  to make.
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  And you made it well, because I mean, every week I speak to one of your
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  colleagues at Brentus,
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  and we talk about diversification, and we talk about money overseas, and we talk
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  about how many,
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  not how many clients you've got, because that's confidential, but it's a thriving
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  business and people want to know how to diversify
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  geographically.
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  And this has been the case, not just for the last few weeks.
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  but for many years ever since I've been speaking to Brent Hurst.
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  But it does present an interesting argument from both sides about whether it
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  is a good thing because
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  it makes the younger people feel more secure.
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  They've got the money overseas already, so they can go overseas.
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  They don't want to stay in South Africa for various reasons, some of them security
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  reasons, some of them socioeconomic.
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  So it must have been a fairly healthy debate on the day of the conference.
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  It was.
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  You know, everybody has a different reason for doing what they do.
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  And this applies to everything in life, who you marry, what job you do, how you
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  invest or not invest, what car you buy.
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  Everybody's different.
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  But it is very,
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  very obvious that there was this pent-up demand by South Africans to externalize
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  their
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  assets.
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  They have been excluded from this for many, many decades.
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  And once the gates were firmly opened,
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  People took opportunity and they took some money offshore.
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  And that's whether you like it or not.
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  I mean, Dr.
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  Stuart Seelbold in the Business Day last week, again, was calling advisors like
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  myself professional pessimists.
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  And we, you know, the worst thing that ever hit the market.
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  I'm saying that's what people wanted.
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  They want to diversify.
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  They want to protect their wealth on a global scale.
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  or whether you...
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  like that or not, it's got absolutely nothing to do with anybody.
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  And Dr. Theobald writes a column in Business Day, but he doesn't mention that
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  he's a...
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  He lives in London, doesn't he?
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  He lives in London, but his client is the Johannesburg Stock Exchange.
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  Now, that stinks a bit, in my opinion.
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  But anyway, so, you know, most of our people, about 70% of our people's money
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  sits offshore.
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  It's legal.
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  It's part of the South African balance sheet.
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  So Africa has actually become richer as a result of that.
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  So this name-throwing because, you know,
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  you've seen as unpatriotic is absolutely ridiculous because you don't understand
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  that Johannesburg Stock Exchange is nothing but
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  a company listed on the stock exchange alongside all the other companies.
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  And more than 50% of the JSE is owned by foreign investors.
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  So the dividends flow overseas.
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  And that applies to all the dual listed companies on the JSC.
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  And the number of purely South African companies is every year falling in number.
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  I mean, the latest one is Metrophile.
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  Metrophile, I just saw a stock exchange.
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  Barlaran, Metrophile, Kuro's coming off.
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  So the choice and the numbers are declining.
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  And here's a very interesting angle that a lot of people don't understand.
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  understand.
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  Impliciting this message of people like Theobald saying, oh, you must invest in
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  the JSC and you must support the local asset managers.
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  Well, let me tell you something.
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  Alan Gray is owned by the Gray family via Bermuda,
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  so it's an offshore company.
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  91 is listed in London.
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  It's predominantly a listed company.
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  Ford is owned by Dave Ford from Singapore.
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  And I can go on and
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  A very large number of our large asset managers are actually not South African
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  companies.
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  They're foreign companies.
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  That's the irony.
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  Is it the truth that if, and would Stuart Theobald tear his hair out and jump
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  around,
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  if you said we don't need the JSC, we really don't need these companies, these
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  companies are tied in,
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  but quite honestly, in 20, 30 years time, a lot of even the multinationals.
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  that are still listed on the JSC don't need to be listed on the JSC and therefore
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  won't be.
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  Like Anglo Gold, I mean, look at a few of the companies that are gold miners.
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  I mean, Goldfields, for example, listed on the JSC, it's only got South Deep left.
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  It's got nothing else.
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  Quite correct.
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  And that applies to a lot of Anglo-American has gone.
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  Yeah.
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  So, you know, another point, how much capital has the JSC actually raised?
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  from the investing public in the last 10 to 15 years.
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  Exceedingly little.
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  It's just the money flowing around all the big companies.
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  You look at most of the trades, most of the growth has come from about 20
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  companies making up
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  80% of the market cap driven by NOSBAS process, which is about 20%
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  of the market.
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  So the JSC is extremely worried about our existence.
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  As you say, there might not be the need.
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  for a jsc because you can invest all over the world on a computer on your cell phone
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  why must it be domiciled
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  in your hometown but we don't want to say that because we'll get into trouble as
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  well but somebody will be saying that in
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  they're saying it now and in 20 30 years time it may be more of a reality what was
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  the the
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  attitude towards the anc magnus because you mentioned herzoff having having a full
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  go at the
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  political Pete Fillion, not supporting the ANC,
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  but saying the JSC is a bargain.
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  There are certain companies, certain sectors that are a bargain.
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  And I've heard that from other people that have made an awful lot of money when
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  stocks have been this cheap.
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  But let's start with politics.
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  What about the Herzog angle?
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  Well, you know, it wasn't the Herzog angle that was, he's been saying that for a long
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  time.
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  And, you know, Alec actually invited Fakila Mubalula to come and speak at the
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  conference.
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  And of course, the day before the conference, he pulled out.
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  He then said, sorry, my dog ate my diary or something like that.
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  It was so,
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  I'm quite sure it wasn't going to come and address a predominantly white
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  and wealthy audience because, you know, they were slaughtering him with their
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  questions.
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  So he didn't even bother to pitch.
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  He cancelled the day before.
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  The ANC was cut to ribbons by speakers.
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  Yes, from the floor.
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  And judging from that audience, the ANC's got very,
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  very little support in that community.
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  And France, France, Cornelio was quite adamant, we'll see in the upcoming local
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  elections how bad it is.
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  And he says ANC could be below 20% at the next general election.
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  But there's a danger that the ANC might do a deal with the...
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  MK and trying to save their bacon.
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  So politics is going to be very important in the next couple of years.
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  It can change, and it can change quite quickly.
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  Before you know it, the UK has changed.
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  I mean, you've got reform.
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  Okay, it's only got four or five seats, I think it is, in Parliament at the moment.
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  But there's polls out that would say that it would be neck and neck between them and
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  Labour as to who put somebody in number
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  10 Downing Street.
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  reform a few years ago wasn't even known it was run by this lunatic from south end
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  in essex for goodness sake and
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  now he's standing next to trump and it can it can turn on a ticky as you say in south
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  africa it really can
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  so yeah it's not a boring country and uh
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  we'll see what happens we will what's the message uh magnus coming out of there is
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  obviously very different to the 91 conference
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  i got that message what's the message from biz news we can moan on as much as we like
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  about the anc
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  but it's doing something helen zilla is
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  the mayor of johannesburg i don't know lots lots of uh is there a vibrant
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  movement
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  for change which is manned by competent people in other words do are people coming
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  through the
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  ranks that want to change south africa whether it be economically fiscally
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  monetarily or or
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  politically.
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  Well, I think, you know, the fact that Ramaphosa last week addressed 5,000
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  ANC councillors and lambasted them and said they must manage their cities and
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  their towns
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  like the DA does, I mean, that...
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  didn't go down well amongst the ANC, but he was forced to admit that the ANC has
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  destroyed our little towns and our
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  medium-sized towns and our cities.
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  You cannot ignore it anymore.
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  You cannot evade this question of the destruction,
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  both financially and else, where it's just astonishing.
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  He has to do something.
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  There's signs of desperation in the ANC.
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  even the Let's call them the leftish news media.
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  And I have been forced to admit the ANC are a bunch of corrupt thieves.
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  The amount of plundering with these so-called tenderpreneurs takes your
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  breath away.
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  It's astonishing the numbers that is being thrown around.
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  People are not stealing 10 or 20 million rand anymore.
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  It's now billions.
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  In the form of tenders.
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  This is like the cancer in South African society, this tenders.
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  Every council, every town, every SOE, you know,
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  puts out these tenders and then it's a question of who gets it and how much they
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  can steal.
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  And that is just like this festering pit in South African society.
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  It's costing us trillions of rands.
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  And in other countries, you can see it.
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  Okay, so there was a good healthy debate,
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  but overall not the most optimistic of conclusions to the conference, I would
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  say,
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  given what you've just said.
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  There were some people.
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  Alec Hogg is optimistic.
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  He says we're at a turning point and we might have reached bottom, but I tend to
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  disagree.
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  But we'll see.
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  We'll see.
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  Nice talking to you, Lindsay.
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  Nice talking to you too.
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  I hope Alec wins the argument.
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  That was Magnus Haystack from Prentice Wealth, and that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.