The time is ripe for South Africans to diversify their investments offshore, said the head of Sanlam iTrade, Gerhard Lampen.
He was partly drumming up the online trading platform, Sanlam iTrade, which launched this week a new offshore offering.
The new feature allows South Africans to trade on all major global markets – including Wall Street, the Nasdaq 100, Australia and Brazil. The service is offered via Sanlam Private Investments UK in London, SPI Direct and gives investors the chance to trade in spreads and Contracts For Difference (CFDs) on indices, foreign exchange, commodities, individual shares and bonds.
Lampen said “While the global picture is likely to remain rocky this year, there are definitely some interesting prospects for investors.”
In my view, the US is the safest place to invest right now. While growth is low, this region is recovering much faster than the UK and offers very good possibilities. Emerging markets still have the potential for strong growth, but they remain a very risky prospect indeed.”
He added that US stocks are strong rand hedges. “Rand hedging will be key for South African investors if, for instance, the US proceeds with tapering. While local investors often believe that stocks such as Anglo American and Billiton provide enough of a rand hedge, the truth is that they are still quite exposed to emerging market sell-offs.”
He said amendments to tax structures have made it far easier to move money offshore. “South Africans are now able to invest up to R1,million of their travel allowance overseas and this can be done very simply at a bank – rather than having to go through Reserve Bank approval. After that we can take up to another R4-million offshore but this needs Reserve Bank approval.”
Lampen explained that CFDs are a type of derivative instrument that allow investors to short and gear shares. CFDs are the preferred instrument for traders because trading costs are much lower than direct equities.
Sanlam iTrade is the online trading division of Sanlam Private Investments. The new offering allows investors to trade on global markets 24 hours a day from Sunday at 23h00 to Friday 21h15 (UK time). Investors find more information by clicking on the “Trade Global CFDs” link on www.sanlamitrade.co.za.