South African investors should look at maximising their offshore exposure at all times, in a diversified portfolio of equities, says Magda Wierzycka.

Wierzycka is the founder and executive chair of JSE-listed Sygnia Limited, and is often ascribed as one of South Africa’s richest women. Speaking at a recent Moneyweb conference, she said investors aiming for wealth generation should look offshore for long-term investment, and ensure that their portfolios are well diversified.

Any remaining local fund allocations should be split between bonds and some equities. She added that it was difficult to be ‘excited’ about local equities as a long-term investment option.

“You only have to look at the basics like the economy of South Africa, the lack of growth, increasing unemployment and high inflation. We are looking at increasing infrastructure problems, not only electricity but also transport, which means our resource companies face increased pressure.

“To be perfectly honest, I don’t see how South African equities represent great long-term value for investors as it stands at the moment. Unless something miraculous happens and the ANC waves a miraculous wand, which they don’t have, and fixes all the problems in the country.”

Wierzycka said she also has offshore exposure in the private investment space, including startups, which offers additional exposure outside of the equity market.

Some reason for positivity 

First Avenue Investment Management’s chief investment officer Hlelo Giyose said it is difficult to be positive in South Africa right now, but there is still reason to be hopeful about the country over the long term.

He noted that since 1910, South Africa has been the second-best performing stock market in the entire world – even adjusting for inflation and dollar values.

“In no small part, this has happened because South Africa has commodities that participate in global growth. South Africa has phenomenal management companies that are really focused on capital allocation and not building over capacity,” he said.

“Unlike the Chinese and Japanese management companies that build capacity and oversupply the economy with capital – with manufacturing capacity, with industrial capacity – we’re de-industrialising because we’re so focused on getting returns per dollar-per rand invested.”