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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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  With me today is a director and the founder of Brenthurst Wealth and that's
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  Magnus Haystack.
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  Now Magnus, it's the time of year when we look back and we must look back, it's
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  important.
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  And in order to look forward, we have to look back now.
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  And it's also the time of the year of what I call the Christmas creep, Magnus,
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  especially when it comes to South Africa,
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  because every year Christmas creeps a little bit backward towards the beginning
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  of December.
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  And what people tend to say to me is, Lindsay, I can't speak to you next week
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  because I'm on holiday, because it's been such,
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  it's been such a difficult year.
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  And they say the same thing every year.
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  Has it been a difficult year, 2025?
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  Personally, I don't think so, Magnus.
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  You know, as far as the markets are concerned, it's been a phenomenal year.
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  I mean, the funds have been quiet.
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  Clients have not been complaining.
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  They've made tremendous amounts of money in virtually every asset class thinkable
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  on Earth.
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  So it's been an extraordinarily profitable year for investors.
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  And if you look at the American markets at record highs, the S&P 500, the Dow Jones,
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  global markets, South Africa, I'll come to South Africa in a minute, merging markets,
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  Japan,
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  gold, silver.
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  The poor cousin of markets this year, believe it or not, has been Bitcoin.
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  I think it's the third or the fourth year that Bitcoin will not be making a profit.
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  down about 10% year on year.
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  But for the rest of the traditional investments, it's been an absolute cracker
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  of a year.
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  And people have made a tremendous amount of money.
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  Indeed.
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  And you said in your very well crafted statement just now, you said, I'm going to
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  get to South Africa in a minute because you,
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  I'm afraid, have become the pantomime villain over the years when it comes to
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  South Africa, because you keep on saying you've got to diversify.
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  If you'd have gone into this particular market overseas and compare it to the all
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  share index of the JSC,
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  look at the difference between the performances.
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  And as I said, you've got this unwarranted, I think, reputation.
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  But this year, Magnus, something's happened in South Africa, hasn't it?
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  At a macro and at a micro level.
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  When I say micro, actually, that's wrong.
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  A market level.
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  Something's going on.
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  Many years ago, there was an economist with the surname of Dick.
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  I think it was Pieter de Kivit.
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  He's a Dutch South African economist.
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  And he said that South Africa over the years, over the decades,
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  progressed through political disasters and economic windfalls.
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  And that was exactly what happened again this year.
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  If you look at the political situation,
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  you still have the ANC and the DA in some form of a coalition stumbling along.
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  You still have confiscation of...
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  property, you still have the Bella Act, you still have all the boogeyman laws that
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  have been coming,
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  and yet the JSC is up 37% for the year.
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  But let me put it into context.
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  It's got absolutely nothing to do with the ANC or very little to do with the
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  ANC's economic policies.
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  And what I mean by that is pure luck.
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  The gold price started taking off in April.
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  And so we're in a full-blown commodity boom.
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  So our gold shares have gone through the roof.
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  They're up 150%.
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  Our platinum shares are other resources sector, which is driven mainly by global
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  trends.
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  And despite the problems with the railways and the ports, our exports are booming in
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  those sectors.
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  So the price, which is not controlled by the ANC, thank goodness, has just gone
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  through the roof.
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  Now, that is a major, major kicker to the South African economy if that happens.
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  Just before you go on, Magnus, just a quick one there.
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  When you come to the ports and the transport of goods from and to the ports
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  so that exports can be
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  more efficiently distributed, there has been improvement.
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  But a lot of that has had to do with the private sector, I think, private-public
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  partnerships.
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  But it has got a little bit better.
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  And we don't have load shedding.
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  Whether that's to do with the ANC or not, I don't know.
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  But there is a little bit of credit due, according to some quarters.
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  There is a little bit of credit due, but it's, look,
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  the electricity situation has been a major, major improvement.
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  The fact that we don't have load shedding, that has been a major factor.
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  Secondly, they are rolling out the distribution contracts for electricity.
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  The government has just signed a contract with an Indonesian company.
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  I think it's ICTSI to run the port of Devon.
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  It's with a
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  Philippine company.
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  Also bought the Pearl Valley Golf Course while he was at it.
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  So there are movements.
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  And it could herald the start of a much more sustainable uptake.
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  upturned in the South African economy.
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  But remember, there was a famous economist many, many years ago, I can't recall, who
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  said, look,
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  if the facts change, your view has to change on the South African economy.
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  And for the last two years, I've been saying, my very,
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  very urgent appeal to get go offshore has actually been toned down quite
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  significantly and
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  very happily putting money into the South African market because the facts have
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  changed.
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  We have had a credit, slight credit upgrade.
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  We've come off the grade list.
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  Inflation is under control.
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  So
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  I have no problem saying the allocation to South African assets has been profitable
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  very nicely.
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  It's about time that South Africans start repairing their balance sheets after 10 or
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  15 years of underperformance.
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  So that's fantastic.
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  But the crux of the matter is to come back to the offshore-onshore debate.
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  That debate is long dead.
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  Everybody is offshore with half of their money or 60% of their money.
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  I cannot find people who don't have money offshore.
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  Likewise, if you look at all the asset allocation models of the big investment
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  companies,
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  Coronation actually admitted that 60% of their clients have taken their money
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  offshore or they've swapped it into offshore assets.
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  So people are comfortable.
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  with having a very large percentage of their assets into offshore assets,
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  which is not linked to South Africa.
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  And that's a pure diversification play at this point in time.
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  I mean, you cannot get into AI or robotics or, you know,
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  the high-tech stuff unless you take some money offshore.
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  Exactly, the JSC.
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  You cannot buy it in South Africa.
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  No, it's not a vibrant exchange.
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  Yeah, exactly.
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  That argument has not changed.
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  So what I'm saying is, yes, the JSC has been one of the star performers, but it's
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  very interesting, Lindsay.
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  I was listening last week to a Morningstar webinar,
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  and it's a global investment company, a very, very large one.
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  And they were discussing asset allocation models and emerging markets versus
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  developed markets.
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  And they actually said South Africa is not their favorite emerging market.
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  destination, which is very interesting, by the way, to Korea, South Korea is.
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  And they mentioned that Argentina and other companies offer much more compelling
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  long-term
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  traction than South Africa.
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  And the second point is, and this could be very significant in the year going
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  forward,
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  if you look at the net foreign buying of SA equities thus far this year,
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  it is still negative.
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  The foreigners are not participating in this stock market rally.
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  And that tells me, well, it tells me they don't trust it.
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  So one must be very, very careful to think, well, that's it, everything is
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  fine.
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  The foreigners are not buying the JSC.
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  They're buying our bonds, unquestionably.
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  Our bonds have been fantastic instruments for foreign debt or yield chasers.
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  But the foreigners are not buying our equities.
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  Well, this is, yeah, you mentioned bonds, and
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  I was speaking to a very well-known fund manager at a very well-known fund
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  management company based in Cape Town.
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  And we looked at the bond market, and it's been an astonishing performance since the
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  so-called Liberation Day, where the
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  South African 10-year bond was yielding over 11%, and then it got down very close
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  to 8%
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  in the month of December.
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  And I put it to him, I said, well, the bonds have reacted first.
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  The bonds tend to be the smartest of the markets of the asset classes.
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  They reacted first.
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  Is it the case, I put to him, that perhaps the equities have lagged because people
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  are sitting down and saying, is it worth it?
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  The bonds have done this, and there's a few green shoots with grey lists and
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  upgrades from rating agencies, etc.
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  Will the equities be next?
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  And he put it to me that, yes, they will be next.
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  And SA Inc.
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  companies are going to have a terrific...
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  2026.
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  Would you buy that argument?
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  If the ANC doesn't stuff it up with
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  101, if they just let the private sector carry on with what the private sector is
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  doing,
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  that is saving South Africa, then I will buy that story.
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  Everything is in place in terms of credit, upgrades, grade listing.
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  I mean, inflation is a 3, 3.5%.
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  Our companies have weathered the worst of the ANC for the last 10 to 15 years.
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  They have trimmed down.
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  They've managed to survive and grow their businesses during this period of
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  time.
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  They just need a little bit of a tailwind.
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  and they will do extremely well.
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  And a classic example of that, and people ask me right now,
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  what is your favorite asset class in South Africa, considering all these various
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  things floating around,
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  and especially for more elderly people, I would look at the listed property sector.
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  I mean, five years ago, it was uninvestable.
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  The guys had problems with ESCOM for a start.
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  They had problems with rates and taxes.
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  They had problems with...
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  city councils, etc.
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  And they've managed to survive, restructure their portfolios,
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  they've sold non-performing assets, improved their balance sheet.
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  And right now, I personally,
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  I'm putting money into listed properties for a safe and a predictable income going
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  into the future.
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  You know, I'm not scared to say, as you get older, you want more predictability.
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  in your investments than you would if you were, let's call it, middle-aged or
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  younger.
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  And I like property.
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  I've spent some time studying the listed property sector, and I think it's offering
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  very,
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  very good value for conservative investors like me.
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  The person that I was referring to in a previous question to you, Magnus, likes
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  the hospital sector.
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  And he's a person of a certain age as well.
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  So you've got hospitals and you've got… property.
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  But whatever, whether it's a property company on the JSC or whether it's an AI
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  company on the NASDAQ,
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  the simple fact is that Brenthurst's principles do not change.
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  Brenthurst Wealth is a company that promotes diversification.
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  That won't change, will it?
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  No matter what geographical sector is doing what?
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  Well, we're a global company.
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  You must remember, we are creating global portfolios.
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  South Africa is only one part of the picture.
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  And it's an an imminently better place to be than
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  20 years or 30 years ago when you were forced by foreign exchange control
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  regulations to have all your
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  money in one basket.
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  Nowadays, South Africans themselves, especially the wealthier South Africans,
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  are global citizens.
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  Their children are global citizens.
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  Their grandchildren are global citizens.
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  So you cannot grow a business or offer a service to the South African market.
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  If you don't have a wide range of skills, both local and offshore,
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  and that's what we've become.
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  I mean, 70% of our assets are offshore and they're staying there.
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  I've not had a single client say, oh, I want to bring my money back and the RAND
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  is so strong.
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  In fact, when the RAND dipped under 17 last week, I had a number of phone calls
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  and guys saying, boy,
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  I want to take some money below 17.
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  It's a bargain.
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  Because there are certain sectors in the world that you cannot get in South Africa,
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  and you've got to take money offshore to get into those sectors.
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  So nothing has changed.
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  We live in a global world.
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  We live in a globalized world, and nothing has changed.
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  Okay, nothing has changed.
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  So nothing will change in 2026, steady as you go.
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  If you're long of the market, stay long of the market.
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  There may be a tweak here and there.
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  You may go from 40% allocation.
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  in one particular area or asset class down to 38 and up from 20 to 22 in another.
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  But not much changes, Magnus.
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  Why change it if you've done so well in the year that's just about to pass?
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  Well, you know, it's a formula that's worked very well.
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  This year, the assets have done very nicely, which is fantastic because
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  remember,
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  I would say most of our clients still have 30 to 50% of their...
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  total assets in South Africa via residential property or commercial
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  property or pension
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  funds that are stuck in South Africa, they have seen a phenomenal uplift in the value
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  of those assets.
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  And as I pointed out earlier, those assets have not grown in dollar terms for a very,
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  very long time.
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  2025 was the year where they started coming back.
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  Is this A permanent feature?
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  No.
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  Trees don't grow to the heavens.
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  At some point, the valuations will kick in.
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  And I saw this morning a report that the prescient chief investment officer was
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  commenting that,
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  just be careful.
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  There's been an adjustment to the valuations of SA equities, and they're now
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  fairly priced.
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  Be careful not to get too optimistic.
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  That's normally when people burn their fingers.
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  And also the other thing is if you look at a long-term graph at the performance of
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  the
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  JSC and the performance of the RAND and commodity prices in US dollars, they're
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  very,
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  very strongly correlated in commodity cycles.
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  are cyclical just when everybody is so bullish that's when something happens and
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  it comes down and south africa suffers we are still
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  a commodity country are we not magnus we are indeed and and and one of the signs
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  that be careful
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  is the oil price is plunging yes and the oil price responds much quicker to
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  commodity changes and the oil price
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  currently is telling you the
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  commodity cycle is starting to look a bit toughish and maybe time to just go to the
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  sidelines.
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  Will you rush into the JSE with large amounts of money?
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  No.
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  If I just sit now and allocate between SA and offshore,
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  I still find compelling evidence of good value in Japan, emerging markets,
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  even Europe.
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  And I'm just safer having a nice globally diversified portfolio instead of
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  something,
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  an asset class that's totally exposed in one country.
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  And the last point I need to make about the onshore-offshore debate is one must
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  also never forget a
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  lot of people are very comfortable having their assets elsewhere out of the control
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  or the immediate control of the
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  ANC, and they're very happy to have a nice little nest egg in Guernsey or Isle of Man
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  or whatever the case might be.
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  Yeah, but just be careful.
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  And, of course, I'm promoting you, Magnus, and your company, but if there's any...
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  If there's a change in the law or if you're getting too complacent about your
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  portfolio, don't be.
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  Always keep in touch with your financial advisor because when you become complacent
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  and everything's going well,
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  usually something happens.
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  So the importance of a financial advisor is probably actually more magnified when
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  you are
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  doing well than when you're not doing well.
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  I don't know, but I'm rambling, but keep in touch with your financial
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  A lot of academic studies that have shown that people who try and manage their own
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  stuff,
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  they're invariably way beyond the market.
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  They're always late to the party.
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  But investment, and this is a very important point,
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  investment advice today is not only just commenting or managing markets.
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  You are having to deal as a global investment company with a variety of
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  disciplines.
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  You need to give advice on.
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  tax, South African tax, offshore tax, inheritance tax, inheritance.
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  Should you put your money in a trust?
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  Should it be in an endowment?
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  It's become far more complex than simply just advising on investment.
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  So investment advice is still a very important part,
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  but we are spending now more time giving attention to the structure of your
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  investment.
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  Should it be in your name?
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  Should it be in a trust?
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  What about moving your assets from your name into a trust?
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  Where should this trust be?
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  What about tax?
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  What about inheritance?
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  What about estate duty?
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  So that's normally where people really stuff it up.
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  They try and do it themselves, and then they spend a lifetime building up assets.
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  And by not paying attention to the structure of their investments, it all
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  comes...
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  falling down in a heap by means of a bad will a bad trust or a outdated trust and
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  it also what's the point if you don't spend time on the structure of your global
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  investments and that's
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  where we are spending a lot of time sitting
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  down with our clients who've made money some of them significant amounts of money
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  yes but the investment
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  is in the wrong structure Well, this is interesting.
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  In my inarticulate way before you gave your explanation as to what Brentos has
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  become a client
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  to advisor is that as you get richer and as you diversify more and you go into
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  different countries,
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  different asset classes, etc., your life becomes more complicated.
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  It shouldn't become more complicated.
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  You just hand it over with a fee, of course, to a financial advisor.
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  As you get richer, it becomes more complicated is what I'm saying.
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  That's exactly what a lot of our clients tell us.
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  They say they can actually spend time doing what they want with their kids,
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  grandkids and their hobbies.
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  And they know they have a trusted relationship that's been there for 20 or
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  30 years.
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  And they're comfortable because they know the structure works.
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  Because we do spend a significant amount of time and energy making sure that these
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  things are in place.
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  Good.
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  Magnus, have a very good Christmas and New Year.
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  You've already given us your tip for 2026, which I will repeat, actually.
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  You like the property sector of the JSC, having been beaten up over the years.
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  But I think 2026 is going to be a good one.
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  All round, long may the 2025 mood continue.
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  And thank you very much for your contributions throughout the year.
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  Magnus Haystack is director and founder of Brenthurst Wealth.
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  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.