With the current market outlook, should South Africans be buying local investments?

The current market outlook is stressful for South Africans who are looking to invest. On April 6, 2020, the Rand was trading at R19,26 to the US Dollar but by December 3, our currency had strengthened significantly against the greenback to R15,19, at the time of writing, its best level since the first week of March. Craig Kiggen, Consolidated Wealth’s Managing Director, says this strengthening of the Rand leads to a question that is regularly fielded by financial advisers: should a client invest locally or take their money offshore and when? The answer he says is not straightforward as there are many factors that need to be taken into consideration. “For a client looking to invest in the long-term, a well-diversified portfolio that includes both Emerging Market exposure and offshore investments will help them to achieve their goals,” Craig explains. “Buying asset classes at the right price is however critically important and today, given what is happening with the Rand, sending a part of your investment strategy offshore is worth more than just modest consideration.” Craig says there are several short-term factors that are currently dominating the Rand’s movements: Over the past five months, South Africa’s current account went into surplus as commodity prices (our biggest export) were strong and the oil price (our biggest import) was very low. During November however, this trend swung and oil is now up by 27%.The US Dollar is somewhat weak.The investment world turned bullish for Emerging Markets post the US election. This can…

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