FirstRand delivers 13% earnings growth and OUTsurance declares special dividend after record year

0:00And now the money show with Stephen credit on 7.02 Let's walk the toll. The money show with Stephen Curtis is brought to you by Absurd Business Bank, Connect with a team that understands the lay of your land at Agri Business at Absurd.co.co. Nine minutes after six the time. Good evening, welcome to the program, impact day of corporate results, but above all of that is the headline about fuel prices. And I'm sorry to say oil creeping up again 105 dollars a barrel. And what that means is we're now in a position where we can start to really make predictions about what will happen at the end of the month at the beginning of October. And I'm afraid to say on a family radio station. I don't know if I'll deep we should go into it. Basically, it's going to be bad. The numbers are going to be quite difficult. And I think it's going to have an impact on the economy for the rest of the year. We'll speak to Mary Velakazi, the CEO at first round in just a moment already on hold to talk to you. After they've had quite a strong year of operations here affected by what happened

1:03in the UK, Martinez Fischer is the CEO of the Outcher and Scroobe. A very strong year for them as well, although whether an Australia are playing a role, they aren't yet making a profit in Ireland, although they're just starting there. So it'll take a little bit of time. Sunlam, we will speak to their Chief Financial Officer, Abigail McCuba in about half an hour as well. And this is really when they've had some strong growth in a very competitive area. They've got a bank coming online with Go time next year. And then also Dr. Andele Sancou, the chair of Transnet, they've made a profit, although they're still a lot to do at Transnet. Now, I don't think anyone at Transnet is denying that. But I will ask about the role of the private sector at Transnet as well. I think that's going to be an important interview just before 7 o'clock. Good to hear from you. O.D.A.1, W.A.3072021, 44605067 and Voice Notes tonight. Please, on O.D.A.72021702. The money show with Steven Krudders live on 92.7 and 106 FM,

2:07streaming on the Prime Media Plus Snap and DSTV channel 856. Well, the first ran group reporting its earnings were down 5% for the year to the end of June. Mainly because regulators in the UK have ruled the group must increase its payouts for car loans, taken through its British arm. Eldermore, first ran is now selling that group. They made that care a little while ago. Without that, though, their normalized earnings were up 13%. Mary Valakazi is the CEO at first ran. Mary, good evening and thanks so much for your time. You must be disappointed at how the situation in the UK has turned out. There's still some processes to go through there. But it does look like it's going to cost you a lot more money than you were originally hoping for. Yeah, no, Steven. It interestingly enough when I look at the situation that we've had to navigate in the UK. And I reflect on where I was this time last year. The worst is almost behind us.

3:09As opposed to these are numbers that we've internalized some time back around how much this redress scheme is going to cost. We put our best foot forward in some of the legal challenges. So it is what it is. And I guess our conclusion was that we can't operate in that market. And sometimes there is peace that comes with getting to the end. I don't know how long that's going to take for the actual payments. And the redress scheme to be finalized is being challenged. But I believe we've put in keep provided for it. And I think there's the risk of a top up to do the small amount. And most importantly, the business that we are selling all the more. Also hoping that by the end of the year we would have got into place whereby we've selected a buyer. There's been an unbinding office. But I've been encouraged with the quality of the people who've shown interest. So I am hopeful that that one I will be able to say we are.

4:14I think the business will probably be in better hands if it can actually be bought by a business that's got a deposit and a funding base. And I think it would in the fullness of time. You can see our return profile does improve without the usual operations. And I also think that business in somebody else's hands will be more valuable. But I guess encouraging our performances from F&B, R&B, and West Bank, local operations and broader African operations have made up. Yes, I'm going to come to that because they absolutely have. But it can't, I mean, the eldermore situation, it can't really get any worse from here. Right? You've provided for a worst case scenario. You've had to raise provision, but this is kind of it. Right? I mean, you say a small top up, but it can't get significantly more damaging from here. I am not going to talk on behalf of the UK regulations. All the assumptions of our reasonable person was dealing with the situations. I think those have been blown out.

5:14So let's see, but I do believe that we've provided for, we've provided for, we've provided prudently. And and you're interestingly that discussions now about what happens if the redress scheme is set aside. And if it's set aside, actually then our actual cost goes down. So, you know, there's, yeah, so that's that's that's the that's the tail that's going to live with that situation. But yeah, but I've come to accept that the jurisdiction operates differently. Okay. As you say, your operations across South Africa and Africa are very strongly normalized concerning earnings up 13%. FNB was up 12%. What's working for you there? Have you been able to make more money through FNB? So, yeah, FNB South African, it was 13% up. I think then the broader Africa subsidiaries, they also did well except in Botswana. So, yeah, so strong performances in retail in particular.

6:18And you know, in retail, I guess we've got large customer bases. And the focus has been on making sure that we are growing customer base, we are growing our customer numbers in the seriously competitive environment. And then, you know, making sure that our customers are deeply entrenched, they deposits with us, they we do their lending and provide insurance and invest. And I think what's starting to happen is that, you know, we're gaining a lot more traction in those activities that we've always we've always done. I think there's also good energy in FNB, I think that the brand is starting to show up in a lot of places where maybe they had been some gaps. So, yeah, so I think there's a FNB come back story in retail. Okay, and that's in the lower end of retail and also in the private segments. And the current experience in particular was positive. So, that's been pleasing to see. The oil price might be something that derails us for quite some time, but what we did see for most of this year was just improved affordability. Because remember,

7:20we rates were two years ago, two years we now sit. So, overall, the group has raised provisions of about a billion rent for the for the for the for the for potential oil price disruptions to inflation and rates. But that's the FNB story. I think one of continuing on executing on strategy, looking after customers, making sure that we've got relevant propositions and that we are competitors because the environment is sitting in competitors. And then FNB commercial has also been, you know, I think a steady solid contributor over a long period of time. And so they continue to they and they actually still continue to grow customers. And, you know, what we always located and think that's such a big franchise. But yeah, they managed to hustle for growth and find sectors in which, you know, there are certain industries where there's where there's growth. Because in South Africa, I guess you have to look at some industries are doing better than others and you know, you need to follow try and follow where the action is. So, I wasn't intrigued by what's happening at West Bank. I mean, if you see headlines saying,

8:23we're buying a lot more new cars as South Africans, you'll think, oh, maybe there's an opportunity for West Bank there. But in fact, their earnings were down 4% and their payments were up 28%. Something not knowing hundreds. No, so if you look at the results for the last two years, actually, I'm for West Bank. They've had very strong, they've had very strong advances growth. So, they certainly have financed a lot of their cars that where they've been strong demand in the market. So, that's the first thing. So, now, after two years of very strong origination, I mean, even this year, their advances were up 14%. After those kind of periods, you would expect that your, that your front bookstrain would increase your impairments and then that you would have increased areas because especially since the last, the last cohort we opened up to, I think we opened up by a risk class and which we went back to. So, yeah, so I think if we

9:24sit back and we look at the book growth, we think that that higher level of of of of impayments or credit provisions is warranted. And then there are two most specific things we provided for. So, one of them is for the Middle East conflict, as I've just said, that increased the provisions further, I think it was about 12% of the 28. And then we specifically raised a provision, we call it an overlay for the fact that second-hand prices, we think structurally the prices are going to come down or for vehicles. So, if we had financed your car five years ago and you want to sell it, and you want to sell it at the moment, there are a lot more options for people who would have been your potential buyers. And so, we just, we're just flagging that for ourselves, not that we've seen the experience, but because car prices in South Africa have come down, we just thought to be prudently provided. So, if we sit back and I look at the results for West Bank, I think they reflect where we are in the cycle. But yeah, I think from a, and so the

10:27franchise is healthy, we're not worried that we lend to the wrong people. Mary Velocasi, really appreciate the time tonight. Thank you. The CEO of the first round group, 20 minutes after six. Add, add Stephen Krutters. The insurance group, Outchurance reporting that, despite bad weather claims in Australia, and then still losses in its relatively new operations in Ireland, able to deliver an 18.5% increase in normalized earnings, as strong a round also, affecting earnings from Australia. Martinez Fischer is the CEO of the Outchurance group. Martinez, good evening and thanks for your time. Your South African operations did very nicely, but the real problem I suppose, Australia, you had higher weather-related claims there. What impact did that have on you overall? Even Stephen, thanks for the opportunity, yes. I mean, that's a nature of insurance. I mean, you do see a few bit of volatility because of natural peril events. And this year in the

11:2916 months of the financial year, we had quite severe natural peril events in Australia. But we might quite a strong comeback. So the margin in the last six months in Australia was actually quite strong. And we ended up making 2.8 billion rand operating profit there, which is still a good result. But if you look at the overall group, South African segment of the group, the better this last year, and it benefited from lower vehicle accident frequency, but also lower vehicle-fect frequency as well as the stronger rand, which is positive for the cost of vehicle repairs. I mean, there are a lot more cars on the road in Australia than they are here. So there must be a lot of potential for growth. Are you seeing it as a very different market? I mean, you talk about theft and accidents here, and it's whether there's probably a big effect, maybe. Yes, definitely, whether there's a big effect, and not so much on the core insurance, but on our insurance, it's a material factor, storm and flood. And then obviously because building

12:35costs are so much higher, but the start of your point, really, I mean, to give you context, we have 4 million insured vehicles in South Africa of the 12 million on the road. Australia's got 19 million insured vehicles, so it's almost five times more. So we have just over 7% market share now in Australia, and we have a very good momentum, and that's what excites us about that market, the runway that we still have left in that market. And I mean, at an overall level, Australia now accounts for 62.9% of our revenue. Ireland was 2% and South Africa 35%, so that gives you sort of a feel for the international nature of earnings and revenue. There's a big increase in the number of new cars being sold here. The number of cars in our roads is increasing quite quickly. They're slightly cheaper than we've seen in the past as we've just heard that'll have impacts on second hand values and things. There's all of that give you scope

13:37to grow your business much here, because the number of cars on the roads, new and old, is growing quite quickly. Yes, it doesn't completely translate into growth in the insurance market, because consumers are under pressure, so they're buying cheaper vehicles, so the average premium per vehicle comes down a bit, and also just because a big part of our vehicle is not insured. So the moment a lot of cars are paid off, then people stop the insurance. So it's not fully translating into growth in our segment, although I mean, we're quite in different vehicles, come from wind shear cars from any country, we see there's an opportunity, so we're not really concerned about that at all. When you look at your insurance personal group in South Africa, you're gross, written premiums. You grew those by nearly 9%. Now there's an intense competition on premiums in this market. How are you able to convince customers to choose

14:42you? And please don't tell me it's pre-recorded, phone calls, Martinez, because I don't believe they work. No, not at all. I mean, the most important fact is driving decision-making for clients is really price, service and trust, and we sort of the cheapest for a third of the potential customers, and that's why we encourage in shopping behavior, just for people to shop around, give us a try and see if they can also save. And yeah, we still see organic growth, which is really positive, but then also we rolled out a few years ago our face-to-face channel, what we call our outchirrens brokers, because some clients they don't want to deal digitally or via call center, they want to deal face-to-face, and that segment has also been growing nicely because it gives us access to that part of the market where we underrepresented. It's still estimated that new businesses roughly split 50-50 in South Africa, so it is a meaningful part of the market that we

15:45underrepresented. You talk about brokers, because your outchirrens business division grew strongly. You got 19% growth through brokers there, and your direct business segment was lower than that. What is it about the broker that's leading to such growth? Is it the face-to-face interaction, then? Because I mean, there was a time when insurance companies all went direct. Now, it seems a broker is coming back. I found that fascinating. Those brokers are essentially tight age, so we call them outchirrens brokers, but yes, that unit is growing of a low base, so that that enables it to grow faster. But yes, face-to-face is absolutely still in bulk. Face-to-face insurance selling is definitely not a trade that's coming to an end anytime soon. As I said, 50% of the markets still face-to-face. I think initially direct grew up to a point, but I think we've reached almost a point where they now share a fairly static,

16:46and people make up their mind how they want to do. Especially people with slightly more complex needs. They prefer face-to-face and dealing with a single person to understand their needs. So, yeah, that's why it's important to be able to deal with a different channels. Martinez Fischer, thank you so much. Really appreciated the CEO of the outchirrens group, bringing the time to 26 minutes after six. The money show. The market. Grant Nader is the portfolio manager at the Benguela Global Fund Managers Grant. Good evening. Let's pick it up without churrens. I'm quite strong results. Obviously, issues in Australia and still work to do in Ireland. Evening Stephen, yeah, I mean, that's the beauty of our churrens, right? They've built proper franchise elsewhere out of South Africa. So Australia struggles, a lot of catastrophe and significant claims, but they managed to still deliver great results because SA was firing, and there have been years when SA hasn't done as well, and Australia has been doing well. So, they've really diversified the business nicely, but they're still focusing on

17:47what they do, even in Australia, on their specialty short term insurance. And then the Irish optionality, that only comes to profitability in a few years' time, but they continue to invest the rate of losses is declining. And so, you have that long term optionality still there. It's a good business. I like it. It's not cheap, but you're getting quality. And so, another very strong set of results. FNB, strong results here, have a shadowed slightly by the situation in the UK, but I mean, Mary Velikazzi telling us she's quite confident that'll be behind them in some way, shape or form by the end of the year. Yeah, I mean, it is not really. So, I mean, a massive provision. It's total around 16 billion now, but it has been well flagged and well priced in. The interesting part here is that, formally said, this is a discontinued operation, there's all the more. So, that's definitely on the block. I think they're marketable. Welcome it when they sell it. But in the interim, the rest of the business is doing really well. The core operating performance, very strong across

18:51most of the major franchises, you know, the FNB commercial R&B investment banking, they're growing in the teens. West Bank was a disappointment. Given the environment, we see in South Africa around vehicle sales methods. It is a bit of a surprise, but having said all of that earnings are growing 10 percent, RRE is based off the big four. They continue to execute really well and the outlook is pretty good. Looking at next year, they're looking at high single, low double digit earnings. So, actually a pretty positive outlook in a low GDP environment like this, that's a good result if they can deliver. As Sunnum will speak to their tea financial officer in about 10 minutes, comparable core earnings for the six months to the end of June. They're only up by 1 percent. Yeah, I mean, so on the face of it, it looks a bit light to be honest that around 1 percent, but when you draw down into it, what we did see was that new business volumes are very strong, coming through on life on investment side and on the general insurance side, but they did see

19:53some margin compression come through there, the value of new business or covered business margin under pressure. But I think the important thing is that the core franchise, the core engineer is still growing strongly. And yeah, I think the stock was off on the news a little bit, but I would see this as a strong performance that the growth, the group embedded value was 18 percent. It's still a good result and I think it's fine. You can buy this one if it pulls back and they'll deliver. We've got 30 seconds left, but the Osaka breaking into profit for the first time, there've been huge changes that that group used to be net one. And certainly they seem to be making progress acquisitions, bank zero, a lot going on in that group still. I think you hit an Alan ahead a lot going on. I mean, a good number, you know, Iberdard, just an Iberdard 41 percent. The stock is quite cheap on 13 times earnings, lots of growth there, but it's a lot of moving parts as well in a very competitive industry. And you wouldn't typically find this kind of growth

20:57at this price. And I think there's, you know, there's a bit of uncertainty about how they drive the business forward in which sector is fairly competitive. But I thought it was a good result. Grant Nader, really appreciate the time. Thank you very much. Indeed portfolio manager Ben Guéle, global fund managers, bringing the time to 630. The money show with Stephen Kruehter's on 702. Good year from you tonight on 072 702 1702 17 minutes to 7. Well, the insurance group Sunlum reporting is comparable core earnings for the six months to the end of June up by just 1 percent. There was severe weather claims a stronger ran the couple of other factors as well. Abigail McCuba is the group chief financial officer at Sunlum. Abigail, good evening. I really do appreciate the time. Thank you. So your earnings affected. It seems quite badly by the higher number of weather related general insurance claims here in South Africa and then across Africa. I mean, how big was the impact of that flooding? Must have been a big part of it.

21:58Good evening Stephen and lovely to be on your show again. Yes, flooding was a big part of it. But also maybe if I just take you back in South Africa, we had the flooding in February in the northern parts in the eastern parts of the country. And then in May, we also had those extended flooding in eastern and western Cape. So we pretty much had over the period about two, three large events, what we call large loss events, over that period. And in our South Africa business, that contributed to large losses of 680 million that impacted our income statement negatively. And also in our Africa, the rest of Africa business, we also saw floods in Morocco. We saw a cyclone in Madagascar. So it was a half of the weather was not on our side in that regard. You were able to increase your new business volumes by 22%. Now there's a lot of competition

22:58in the insurance market. I don't have to tell you that. How difficult is it to increase your new business volume by that much when there are a lot of products out there? It shows you the, I suppose number one, how competitive we are, but also the quality of our client proposition. And also the hard work of our intermediaries that make sure that we retain and continue to increase the volumes. But ultimately, it's an indication that the customers still trust the offering that Sandlam has to offer them. And the Sandlam name behind some of their most valuable assets, including their retirement assets. So in that regard, I think we're very happy, not think we are very happy with the fact that we're sustaining the quality of the quality of the business into the future. We've seen higher fuel prices obviously because of the conflict in the Middle East. I mean consumers are under pressure. Is that affecting your business much? It does impact us even in the sense that we're very well aware that our clients are

24:03experiencing very tough conditions. And we are also competing with other stable in terms of a share of wallet from the same client. We've also seen a slight increase in lapses for some of our clients. We engage proactively to try and manage so that people don't necessarily lose their cover. Rather, maybe you change the format of the cover during the tough times. But you still have at least the base cover. But we do. We have picked up that there's been an increase in some of the lapses as inflation is starting to bite on almost on a consistent basis. Your life insurance division saw a new business up by 14 percent. And part of that is from your business in India. And there's obviously it's such a big market. The potential is massive. How have you found operating in that market so far? The India market, we have become familiar with it because we've been there now for 14 years. The bigger part of for 20 years,

25:07after I'm thinking about the 14 percent increase, the bigger part of our India investment, historically has been more in our credit business. And we have now strengthened the insurance side both GI and life. And so far, we've found the environment quite interesting. One, the India life insurance is quite under penetrated. So there's a massive opportunity of growth. And obviously India is a case for scale if you just compare the population in India relative to South Africa. Secondly, the opportunity of cross-selling life products, credit general insurance products to our credit customers already. And then lastly, the partnership that we have with the Shri Ram Group in India. So we don't go in a fandom. We generally, when we go to markets, we partner with an existing in-country partner that actually understands the dynamics of that country. And that gives us a bit of an added advantage as well.

26:10In how you operate in that market. So we're looking forward to the growth of the life business in India as well. You say you're going to continue with deliberate investments in future growth platforms and you have the bank operations with go time coming on stream next year. How's that going to affect your business? It affects the business in that. If you look at this current period, that investment in credit banking and rewards as well as don't forget the investment in the law. It's indicated in the system. It's led to about 329 million of losses in the annual numbers. But we're comfortable with those losses because it is something that we had budgeted for as we plan to grow the business. We expect that these businesses, hopefully the ecosystem should start to really kick into play towards 2020-27 and 2020-18 beyond. But it's really just the investment in making sure that our South African ecosystem and the

27:11Lloyd syndicate scale is up. There's a lot to do there. But with your bank, we see other banks coming online. In fact, two big financial institutions have said their banks will be the center of their operations. Your situation is probably a bit different to theirs. Is the bank going to be central? Is it just going to be a part of it to early to say perhaps? No, the bank offering is not necessarily going to be center. The main drive for us was to make sure that we are offering the value propositions that our clients need, need requests as to. And transaction out banking is something that was a gap in the San Lama offering. So the intention is to have access to transaction out banking for our clients. We hope go time continues to be strong in terms of their banking offering and we hope to be strong in terms of our insurance offering and in partnership. We can have then a value proposition for the clientele that gives the full

28:16value chain. I mean, some of the things that we intend to also grow there is also the credit business. We've also got again with go time. We also have the credit partnership that we're hoping to grow through the digital platforms that they have. But also for us, we've been in credit business for a long time. So we also have the skills in the background that we can bring to that partnership. Abigail, thank you so much. Abigail McCuba is the Group Chief Financial Officer at San Lama. In a moment, Dr. Andele San Crou, who is the chair of Transnet on their profits today. Well, it looks like some of the progress of Transnet showing up in its results today, making a profit of 4.6 billion rand. First profit in four years, there's been a major focus there

29:18of governments reform project after all of the problems that were exacerbated during the state capture era. There were one or two sales during the period, which may affect that result as well. Dr. Andele San Crou is the chair at Transnet. Andele, good evening and thanks so much for the time. So, I mean, the headline is that you make a profit. Do you see Transnet is becoming closer to being financially sustainable over a longer term? Good evening, seven and good evening to the Radio 7 or 2 listeners. I think we are because we think that we have laid down all the foundational work that will make Transnet financial and operational is sustainable entity. And I really want just to touch on some of those. One is that we have built an operational discipline in the business where we actually have invested a lot

30:25of capital to modernize our infrastructure in terms of our ports and also even in terms of our radio infrastructure. And we also have strengthened our collaboration with our customers. And also, we have been quite rigorous in terms of our maintenance regime in terms of our equipment and have introduced a life cycle asset management. So, in terms of just bringing in an ethos or focusing on the operations and also making sure that we cut costs as well and also improve our supply chain management processes and modernizing our equipment on the one hand. And lastly, strengthening

31:29our collaboration with the private sector. We think that all of the confidence of all of these measures laid down a very important foundation where the company would continue to be financially sustainable. And we look at today's results actually as a clear indication of the direction of travel. And so to answer your question, I'm really persuaded and convinced that we really have 10 the corner and we have laid a very important foundation for many years to come. You're working with the private sector. I mean, it seems you're working more closely with the private sector. They're privately owned trains in our railways. They're harbour terminals that you own but have private operators. You still have a lot of appetite for that. I mean, you don't think that you've gone as far as you can go in terms of working with the private sector. You think you can still go a bit further? Look, the way we approach private sector

32:31operation is that one, it's an existing asset. In other words, we look for opportunities to strengthen partnership on assets that already exist. And we witness that with the introduction of an independent private sector operator in the Devon container terminal. But our results to that does not only end there. So there are new assets that we plan to bring onto the market. For example, before the end of this month, we will be going to market with an invitation to the private sector to build a manganese terminal in Roja. Also, we are in the market for the private sector to build a bulk, dry, bulk terminal in Roja's Bay. And I can kind of view, for example, with a container corridor, we are going to market and to look for partners.

33:36So our resolve and our commitment and our appetite to do more of the private sector collaboration remains are appealing to us. And it's part of our business model for three important considerations. The first one is that we have identified that as a source of raising new capital that is desperately needed for infrastructure. Number two, in terms of having access to more than technology, which is very, very important for managing logistics platform. And thirdly, introducing global best practice. So those three issues make the case for private sector, participation very appealing to us. And if trans and our delivery model are going forward basis. I'm sorry to interrupt. I do need to ask. Almost every single mining CEO's come on the money show has said, transness railway system is much better, more reliable. Your volumes have

34:41been going up. Are you happy with how quickly you're making progress there? Well, I think we could have done better, to be honest with you. They have in some setbacks, in the sense that if one looks at the security incidents that have happened in terms of cable theft, I mean, we announced today that we lost about two billion rents worth of revenue, you know, that we could have really gone to the bottom line and improved our performance. So that remains an area of focus for us going forward. But I think that all the measures that we have put together coupled with relationships with OEMs to introduce new rolling stock. Those really lay for us a very important foundation to believe that even though we are

35:42beginning to 10 around, but that we have laid important foundation for sustainable financial and operational future for transnet. We've got 30 seconds left. I'm afraid. But do you expect the same with our ports? I mean, they've been increasing their volumes in some cases, Cape Town still has issues, but certainly we're seeing improvements. Look, I think our ports are actually quite ahead in terms of the investments that we have made in the ports. And I think that some of the problems that we are experiencing in Cape Town, they're actually quite isolated problems. I mean, that's not a true reflection of the status of our ports, countrywide. We think that the investment that we have put in in our ports in the last two years are beginning to bear fruits. And we also are aware of the peculiar circumstances that pertain to Cape Town. And we have taken a decision as a board to invest more capital

36:43in terms of equipment acquisition there. So it's just a more timing issue if you ask me, Steven, before we see good results coming through. Dr. Antilia Sanclou, the chair of transnet, really do appreciate the time. Thank you very much indeed on the money show. Just gone seven o'clock. And now the money show with Steven Kredit on 7.02. Let's walk the toll. The money show with Steven Curtis is brought to you by Abset Business Bank, connected with the team that understands the lay of your land at Agri Business at Abset.co.z. Eight minutes after 7.20 to come. So often nowadays, you'll hear stories about your tech is listening to you. And there's some sort of speakers and Amazon products and things that have had to change their design. So any internal microphones can be switched off physically just because we both don't trust them anymore. And I've, you know, from time to time had a conversation with someone and they noticed that when I'm on the internet next I suddenly start to see

37:45advertising around a product that I was talking about and got a bit suspicious. Maybe I'm getting paranoid. Maybe you're not paranoid if they're really out to get you. And sometimes I feel in the digital world, that's really what's happening. Well, see, Pumelette is on these looking at that issue. We'll hear from him in just a moment in our tech feature. We will talk about AI and small business. No, small business owners generally. You're just trying to, you know, sell the product. So try so you don't have time to play with something or try something new. We'll talk a little bit about that. And then it's a really interesting topic tonight in investment school around the concentration of large shares. So a good example, think of what's happening in the US. Everyone's talking about the big 10 AI stocks and what that means. And then that crowds everything else out. Can be quite difficult to build up a good diversified sort of portfolio. I mean, yes, Warren Buffett did it, but it took him a long time. So I think that's going to be quite an interesting conversation in investment school in a bit. Good to hear from you. A double 1, double a 30702, 021,

38:47446, 0567 and voice notes on 07, 07, 02, 1, 1, 7, 02. The money show take Thursday. Well, Apple has a new watch out window. They and they say that this new watch will process live audio and transcribe what's actually being said. And you kind of wonder at that at some point in an era where you have firms that can really navigate huge amounts of text. But once it exists a text, I mean, how could you be analyzed? What could happen from then if you watch this listing? Supermalele Zondi is our tech expert. Supermalele, good evening. I mean, the Apple watch. Is it always going to be listening to what we do? I mean, I hate to say it, but Apple is the kind of company where you have to ask this question. Hello, Steven. And it seems like for most people at MITRE, obviously Apple is going to say that you have to wake the feature up and you have to agree to the tech listening to you. But it seems

39:49like that's not going to be happening. Especially if it's going to be transcribing what's happening in your conversations and also be happening around you, including by the way, whether a doorbell rang in your house at a particular time or not. So it's going to be figuring out those things which suggest that you can have mechanisms to agree to this information. And if you know, there's a lot of people that express accept a lot of the time with a lot of these features and sometimes you forget to switch it off if you don't want it to listen anymore. So I mean, it can be quite tricky. Watchers have been taking instructions from us for a long time. So speakers have our lights serve all sorts of things. Why do we worry about this issue now? Is it something that's really personal about the watch that you wear? So yeah, interestingly in the past, that it is wake work that you'd use, right? Where you could give your tech a name, for example, and say, listen, see them, what's the information about this, that and whatever. But it seems like

40:52what's going to be happening here is that it's going to be constantly on. For example, if someone is knocking on your door or if, for example, you've had a conversation with a colleague and you need to work on their reports and you've forgotten the exact details of the reports and then your tear could have collected and documented that conversation for you. So you can then go back and get this information. It's not going to be using prompts in the way that it did anymore, especially if you have given a permission to continue listening to what's happening around you. Okay, so I mean, isn't consent required in situations like this? Or is it a bit like, basically, I always call it the Facebook model? We just get so used to it. We don't even think about what we're giving away anymore. Well, that's a shame, right? Because we have been looking for, when you're looking for information, you usually type it out. A lot of the time these days, they can use those prompts words and then get your tech to give you the information. But you don't

41:52think about it because sometimes we only have it on all the time. And yes, they say it's not supposed to be recording voice, but in a way, it's connecting data in a different way, if it's transcribed in the data. It's listening on certain conversations because yes, you may say, they may say you have given a permission to do that. But yes, it's all be listening to a lot of things that you would be saying. And they might say that, well, it helps with people who are living with certain disabilities. They say people who are hearing impaired, for example, then you need to know that listen, the microwave made a sound that it did not bite here. They found. But sometimes you wonder how far that information is going to go. And be... I mean, one of the problems with any of the tech giants, and this is not just Apple, it's all of them, is frankly, I think they've lost our trust. I don't know if we trust them anymore. Well, there's that thing in the past, when they've been asked whether they listen to conversations or not, they would say no because most people, I'm sure you have stories too, in a way,

42:54you would have been discussing things with family, let's say in the car, and you find that various products that you use are suddenly advertising, whatever it is that you may have been discussing with the kids in the car. And when they've been asked, they've said no, they don't actively listen to your conversations. They've pre-written, they have said that it's because maybe you would have been searching for that information, stuff that you would have been interested in, it's stuff that the people you follow on social media would have been also interested in. And on truck as well, do they share information with their platform that they would seem like they do? Because when certain information appears, it doesn't just appear on one particular platform, it would appear on several platforms. So I mean, there's been a long time when we used to worry about whether our TVs were listening to us. Now look, I ignore what's on my TV half the time, but I'm not so sure it's ignoring what I'm saying in front of it. Again, with the TV, right? There even have been worries whether your TV is actually watching

43:58actively in your house, right? But again, it's something that tech companies have repeatedly denied. And they say, well, it's there because maybe you would have watched a similar TV shows, or you would have watched a similar, you would have watched similar movies. And then it then suggests what you might be interested. They repeatedly deny this information, these suspicions that people have, that they're even listening to us. They are either watching us. They're doing more than we've given them permission to end now. In this particular case, they say, well, it could be continuously listening to you your entire day you'll watch that is. And it could actually, if you stop at a petrol station at work, etc, etc. And it's getting them to be back to you. I'm just trying to imagine the words my TV will have learned over the years and have been watching sports matches, supermolele. With this kind of data, so it doesn't just stop with the

44:59people who made the watch or the TV or whatever, can it go to other people, third parties? With third parties, it's because they would be having conversations with those third parties, right? So you may have agreed to that information being collected by the device and say, well, track me throughout the day and figure out what I'm having conversations about throughout the day. But third parties don't really agree to being recorded and documented. They've been documented because you are there in the room with them. It's different from a meeting where you can ask everybody in the meeting whether they agree to the meeting being recorded or not. But in this particular case, you could just be documenting them. And we do know that there has been instances where information has been connected without people's approval and sometimes as we find out in this country, it gets used in commissions and things like that when not have thought the information has stored anywhere else. Supermolele, thanks so much. You've got to be so careful. Supermolele,

46:00there's our tech expert, Supermolele Zondi on the money show, 17 minutes after seven. The money show, small business focus. Small business focus is brought to you by Kabytek, starter. I will scale up with Kabytek, the business bank for everyone. Everyone talks about AI all the time and I'm sure somewhere there is an AI generated YouTube video telling small businesses to use AI to improve their business practices, but actually finding the time, the practical use for AI if you're a small business owner and you're really running around all the time, might in fact be quite difficult. Ken Lopeschuk is the chief marketing officer at Hyperdev AI. Good evening. I think many small business owners, you're simply just trying to get through the day. You don't have time to play with the new thing. Where do you think you should start with AI if you're running a small business right now? Good evening, Steven. It's just lovely to be here. I want to thank you for having me and good evening to our listeners. Look, I mean, it can be daunting for small

47:01businesses and as such, I think we should start looking less at the technology that we have available to us, but more about, I think, answering small questions in the sense of what problems can AI solve for you in your business? Start with the smallest questions first and go, what can I automate through AI that can make my life as a small business owner easier? I mean, most of it is really the backroom stuff, the admin, right? It's probably not going to be with whatever your main product is. Absolutely correct, absolutely correct, because I mean, as you state, it's backroom admin stuff, which means it takes time, right? That's the kind of thing that you want to employ AI or AI agents. And when we talk about agents, we talk about little snippets of software that's running stuff in the background, kind of automated that you need to worry about, that you can focus on more of what your business needs in terms of what you want to achieve. So it's absolutely the mundane stuff

48:04that you really want to employ these technologies to cover for you. Do you need to find a way to show your team what it can do? It's no point just you getting a group on this stuff. Absolutely, absolutely. Look, I mean, I think that the lovely thing about AI tools, especially with what we call vibe coding or Gen AI software development tools, is that you can very quickly build a first working version of something and literally deploy it onto a preview URL and go show that and demo that to your team, which is incredible if you think about it, because just a few years ago, and I'm talking 24 months ago, something like that took a lot of iteration between UX teams, design teams, development teams, even to get a low-fi demo up and running. Now it sits in the hands of a small business owner to go and tinker with a few lines of natural

49:05language, get something that's kind of MPV, MVPS and go show the team, listen, this is what I'm thinking, this is my prototype, what do you guys think and take it from there? You also need to be able to measure it, right? And I mean, in this case, you probably, I mean, your unit of measurement, you probably need to be time-saved. One hundred percent. Look, I mean, you also need to measure what you are getting from the output as well, right? So it's all great and amazing if you stay at the time, but if the output doesn't actually gather the result that you wanted it to do, that's fine wasted as well, right? So that's also why we need to kind of post launch or post development of the product, measure of the impact of the product. But absolutely, from a time point of view, it is absolutely incredible the time you can save through processes just by tinkering with AI tools and getting

50:05something up very quickly. So it's more of a useful question to say, you know, whether the technology field and pracer is great, but what time does it save you and what experience does it improve to free up the time of the people that are working for you? So I mean, in a way, you've got to work out perhaps at the start, what do you want to use it for? Now a lot of people will, you know, there are always people, some of them have teenage children who will say, well, I'll be the first to do this and I'll benefit in this way. What do you actually want to do is solve some of boring grinding day to day stuff, some of the small stuff. Now it's small, but if you don't have to do it anymore, it saves you so much time to make more money. Absolutely correct, absolutely correct. And you know, the funny thing is that, and I'm not making assumptions, but most people would go and just attack the technology and just, you know, start playing around and what can I do? And I'll just prompt away, but eventually you're going to get stuck and you're going to have to sit

51:07back and go ask the question first. What am I actually trying to solve yet? What, what, what fundamental time consuming issue do I have that I want to solve? And that requires critical thinking, right? So start there, I would suggest. Sit down, pick one small toss that you know is time consuming that you want to solve and think about, how would you want to solve this using an AR tool? And from there, go into the prompting and the tinkering and see what you get and I'll put that. I know some people will just be looking to save a salary. I mean, you don't approach, do you, can you approach it like that? Yeah, look, I mean, that is a quite an interesting point and it's a point of contention as well, depending on who you talk to, I mean, you know, just our local unemployment rate, I think I need to talk about that too much, but I mean, it's an excess of I think eight million people, which is, which is pretty atrocious to be honest with you. I don't think that the role of III is to replace people and save salaries. I really

52:13don't. They are still a fundamental and I mentioned critical thinking earlier, but they're still a fundamental thinking part in using these tools and adopting these tools, right? It's not about, you know, if you talk about the generative software development, it's not about replacing a developer using a tool like this. It's about enhancing the experience, enhancing the output and saving time, so that that person or that resource can also focus their time elsewhere or run multiple product projects at a time. You know what I'm saying? So it's more of an optimization of resources than a replacement of resources in my personal opinion. You don't, I mean, how nervous you need to be about a wholesale change in working practices? Do you want to do this incrementally? Yes, you would probably want to do it incrementally, but it also depends on where you want to employ these kind of tools, right? I think most of us today can admit that we use basic III when I say

53:20basic I mean, you know, running tasks like research or data analysis, you know, even content output and you'll see this everywhere these days where you can clearly see there's their social media posts and there's posters and there's copyrighting being done with AI, but you know, for me that's that's quite that's that's low tier output kind of stuff, right? I don't think that business owners have really cracked where it fits into the bigger picture. And again, I think only if you sit down think critically and go what problems can the soul? What does that mean for my workforce and how can I employ this to the benefit of everyone? Then it becomes a little bit more clearer. Ken, thanks very much indeed. Really appreciate it. Can I know, Pshep is the chief marketing officer at Hyperdev AI. Very thoughtful about this because there's actually quite a lot to consider and I know it's tempting to just have everybody, oh, we can use AI, we can use AI, but actually if you're a small business you've got to do it very carefully and properly.

54:2625 minutes to 8th of the time. Well, if you look at the JSC and you look at the shares that are traded and if you listen to my business bulletins and you look at the shares that I refer to, you'll notice that you hear the same names again and again. You'll hear the miners, you'll hear your nuss pass, you'll hear your rich Montiul here, all of these companies, your capytex, new shopwrites, new pick and pays, new first brands and even the Fischini group. But that is just a tiny percentage of the shares on the JSC and we have what I suppose you could refer to as a concentrated stock exchange. Now, how did we get here? What are the implications of you for this? And if you listen to personal finance every Tuesday, if you didn't, there's a podcast, you'll remember that Warren and Grimm will tell you to diversify all the time. Can you properly diversify if the JSC itself is overly concentrated? Well, this is what we're talking about tonight on the money show. McQuay, McQuay, Marcelella is the founder and chief investment officer of McQuay Fund Managers,

55:27a Sandra Norte is the chief investment officer at Marzi Asset Management and a gentleman good evening to you both, McQuay. Let me start for you. Is the JSC more concentrated in terms of the shares that are actually traded than many other exchanges? To some extent, yes, and good evening to you and Asanda and to the listeners, because you look usually say what are the heavyweights and heavyweights has to be a certain portion of the JSE, you know, some of our industrial and resources. So in that sense, yes, you can come to that kind of a conclusion. And I think maybe the question of how does one define diversification or don't have to use the 10 interchangeably with what we call exposure to other sectors, because normally they will say have equities, bonds, properties, stuff like that, but does not mean when it comes to equities, I would like all this sectors. So Asanda, they're 10 JSE companies that often end up being half the market.

56:34Now, I'm no expert on stock markets, but by any definition, that must be an over-concentration. Yeah, it is a good evening, thanks for the opportunity. It is, and I think when you look at some of those companies, you know, it's household names that we talk about, so the gold companies, which, you know, just given the movement of gold and the impacts of geopolitics in the world that resulted in gold moving in this way, have become a big part of the market. Naspers, you know, it's become a massive company. In fact, it's presented the JSE with some challenges, you know, over the years. I think some of these other, they call them the Randhage stocks, the June listed, so your Rich Mons, BTI, and other Bush, BHP, become, you know, just massive in terms of the size relative to the rest of the market. And then you've got everything else. That's then just sort of pells by comparison. Asanda, at first, at first, sort of look at this, it would seem to me that one of the reasons this has happened is because of the currency,

57:37because the Rand is weaker, and most of these companies that we're talking about are getting revenue in dollars, whether they're Naspers in China, or whether they're, you know, gold or platinum on it. That is one part of the story, definitely because if you look at the companies that I've spoken about, a lot of them have got those characteristics. Having said that, I think if you look at a capitech, for instance, that's become a company. Even though that's sort of circa four, five percent of the JSE, if you look at sort of the representatives of benchmarks or indices. And that's just by virtue of its performance, the way that it's competed in the market. I think, you know, there's, they've got, you know, 20-odd million clients from a standing start, and that's really just become a fantastic South African story. And so there is definitely the Rand element, but there's also underlying performance of the companies. Naspers is a good one where, you know, the investment they made in China in 10 cents, you know, youngs ago, becomes just this amazing, you know, success story and therefore makes the company just

58:42perform way better and grow much faster than anything else in the market. Therefore, just making it such a behemoth by comparison. Mark, where, if you look at the current trends, is the JSE likely to continue in this direction? Are we on a kind of one way path to concentration here? I think it will depend and it will depend on the sector as Sunder said, you know, now we are taking our industrial mainly. And because those are big companies, but if you remember how the stock exchange started, it started mainly with the core to mining shares. And then because those were the things that were making money, they had to have a new economy. And then by nature, they would become big companies. I'm saying now we are taking a, I wish unfortunately, we don't have decent exposure to, but we look into other markets, overseas markets, they will talk about magnificent seven because those are the biggest things that are driving the economy. So I'm saying at any point in time, the biggest thing that is driving the economy, those kind of companies are bound, you know, to become big. I mean, there was a time the likes of

59:45the ad-con of this world, they used to be big companies. So yes, concentration, diversification will continue to be an issue, yes, but the wood sector is difficult to tell, it don't depend on what is it that would be driving the economy there. And people who own companies in that particular sector of the economy, then definitely their companies will become big. Asunder, do our asset managers play a role in this? I mean, are they all chasing the same companies? Now I can understand why exactly the same things happen in the US, you're chasing for future earnings and future wealth, right? But I mean, is it the choices that they're making? Are they all making the same choice about the same group? Yeah, I think it is, it definitely does contribute because it's a bit of a self-fulfilling prophecy in a way because the asset managers institutionally get given mandates along which they are required to invest. So there's Godrails, you know, so a client might say, look, I need to provide my pension fund members with a decent

1:00:51retirement when they retire. And therefore, I think investing X amount in the JSE, but looking at it from the point of view of this particular group of companies and you can invest in this group of companies, choose amongst these groups of companies to invest in. So that becomes a constraint in the sense that the asset managers are forced to follow. Now, when you look at that group of companies, let's say it's the all-share index, so that's, you know, whatever, 200 companies or whatever, naturally, you know, if we all analyze these companies and Capitac pops up as a really good company and that's the truth of the matter, the money is going to then concentrate into into the Capitac. But I think also the criticism that we can level at asset managers is that at times there is a bit of herd mentality in the sense that companies don't become big by virtue of they're just being there. It's because money flows into the companies. But that crowds out opportunities for new companies, new opportunities. So I think Mr. Mark was mentioned AI. You know,

1:01:55there's probably a bunch of startups and so on in in in South Africa, looking for capital to do stuff, but because of the rigidity sometimes of the way that we invest and manage money and where we put money, we then don't give opportunity for those companies to also be contentors to receive investment from asset managers. That could potentially be one of those things that then helps in the in sort of reducing the impact and the size of these big companies that we currently have. So I mean, Mark, where that also has implications for the economy, it means that companies that if we did not have such a concentration would get more money to start and scale up, they would get that money, but they're not because of what we see playing out with this concentration dynamic. So true, you know, and remember, the stock exchange, the way it's supposed to be, it's supposed to be a leading indicator for the saving of the main economy. So if we think that the real main economy, that's how it will be growing. These are the sectors that will be doing

1:02:56while then definitely that should be reflected on the companies that gets to attack the money when it comes to the exchange. So yes, unfortunately, it ends up having that in a way of not giving a clear reflection. As As Sanda said, that we don't have a charge, we have to go to Kepi Tech as an example, you know, in this instance, but now the argument is that the bank of the future or the other guys will be doing better, but as people have done research and they think that Kepi Tech is doing better than they have, they appear, then you will think that this is a reflection of economy. So it distorts the party. It doesn't give a clear reflection all because of the decisions that we make, all because of the less companies that we are able to infer in, and all because of the kind of mandates that you'll ever received from our clients. As Sanda, I mean, this also means that if As Sanda and Stephen are both planning and McWea planning a retirement and we go through three separate asset managers, we're all learning shares in the same things, even though we've gone through separate people. So like,

1:03:59what's the point in having any competition in the first place? Absolutely, and I think that's why I suppose, you know, the depth of your capital markets becomes quite an important aspect and dimension of the way that capital markets are run. So if you look at the US, you've got thousands and thousands of companies that are fairly sized, well, sized, you can actually go in access and buy them, buy and sell the shares. So it's yes, of course, there is actually some concentration there as well now because of the tech shares and so on. But just if you look at just the share number of companies, it is very possible that you go to four, five, ten asset managers and find that the portfolios do diverge to a degree. But I think also, you know, on the two, they are credits, if I can say, these big companies, one of the benefits and the things that advantages of having them develop. So in Asperz, it does put our market on the map. Yeah, yeah. Because now, all of a sudden, you've got offshore capital that's very interested

1:05:03in In Asperz because it's just so big on a global scale. So it does put, you know, a company, it does allow maybe more capital to flow into a market which would otherwise be ignored. If you didn't have these superstar companies, I think the challenge for us as a market is from a diversification, for the interest of diversification is to perhaps start to look a bit wider as far as where we allocate capital, educate our clients in terms of the virtues of investing a bit wider, the impacts on the market diversification because also as Mr. Marker said, I think one of the challenges with a sort of a concentrated stock exchange is that you have the illusion that we're doing well. So if you look at last year, you know, markets are 40% you'd say, wow, the country must be doing phenomenally well, but you know, our growth was less than 1% and it was all gold. But that's because it's all gold. Okay, so my question, so hi, my name's Steven, I'm an investor. I want to do two things.

1:06:07I want to have a comfortable retirement and I want to help to sort of grow the economy by giving people new opportunities. I want to invest in the economy. How do I go about doing that when everything's overly concentrated and wherever I take my money, whichever asset manager, they're all going to do the same thing anyway? I think we, you have probably got to be too retire-couple for because remember, who should we have to be clear about? The company will only get money the minute waste that is showing shares IPO initial public offering. Thereafter, once that's buying and selling those shares is just between us, that money doesn't even hit the bank of that particular company. So the guys have raised their money, that's it. Then thereafter, it's us playing with that particular share. So it's not going to really help that particular company. Yes, there might be some other benefits that it gets to be better-known, better trusted, a better brand, but capital-wise, they will have already received them unless they go and issue more shares trying to raise more

1:07:10capital. So yes, you end up getting more or less the same performance and maybe that is why this argument of why do you want to be active? Why don't you just go passive? Why don't you just go and buy the index and just the rest? Because at the end of the day, you might end up moving the model at the same kind of returns as we will say. And also maybe that might even be cheaper because even the cost, the management fee because the guys are not active, they're not going to charge you more. So why not just put your money in index and go and sleep as long as you know that index as we said. It may be an index that you know is a solid, a solid company. Okay, and so Sunda, there's also a risk to this, right? Because what can happen is that if for example we look at AI in the US and we look at how that's playing out, everyone's put their money there. If it all doesn't quite work out as we planned, if it's a little frothier than we expected, I mean we're all going to lose money. Steve and

1:08:11microwave, and to Sunda, we're all going to be broke. Absolutely, and you know that includes my daughter's on the trick, might not have tuition money. Yes, very, very. So I think and that's really the points around diversification as they call it, it's one of the free, only free lunches in the world. And I think what you're highlighting and what the scenario painting highlights the need for diversification. So if, and I think the AI space is a good example, so at the moment you've got the AI companies that are producing the models that we all love to play with and use, then you've got the chip companies that provide or sell the chips that go into the data centers that are used to then process the information whenever we do a query or this. So, and then you've got the companies that have borrowed money into the companies that are producing the chips and are delivering the data centers, and then you've got the investors that have invested in the companies that are doing the chips and so the domino effect then becomes you know quite

1:09:14accentuated when perhaps at the top end we all decide actually you know it, a cloud is the thing. So then what happens to chat GPT, what happens to Gemini? Cheers Elon. Grock can do all that. So that all falls apart and then all that money now goes, but you, you let's just say you had the the four sides to say look I'm going to allocate some money to AI. I'll allocate some money to oil that's that's moving now. I've got a bit of gold. I've got a bit of this when that AI bubble or pyramid or whatever falls apart at least you've got something else that can then cushion you cushion the blow. You were at investment school we talking about the concentration risk of the JSC I suppose that's the way to call it is a two concentrated. McWey Masalella is the founder and chief investment officer McWey fund managers. As Sander Norte is the chief investment officer at Masi Asset Management it's nine minutes day. You're listening to the money show with Stephen Curtis brought to you by Apsa Business Bank

1:10:16connect with the team that understands the lay of your land at Agri Business at Apsa.co.co The money show. Investment school. Eight minutes now to eight the time McWey Masalella is the founder and chief investment officer at McWey fund managers. As Sander Norte is chief investment officer at Masi Asset Management we're talking about the sort of over concentration risk too much money going to two few shares. As Sander when this happens so when we are in this situation and you kind of have these monopoly shares it doesn't it mean that the prices of those shares the companies become quite expensive and yet everybody has to sort of has to buy them and yet so you're not necessarily getting the earnings growth that you could from companies that are at a younger stage of development for example. Yeah it's again it's one of those self-fulfilling prophecies in the sense because the more the share price goes up the bigger the company is in the market.

1:11:18The more money has to go into it because it's more it's a bigger component of the JSE so if your client says you can only invest in the JSE in these certain companies it becomes a big component of the JSE so you've got no it to hide as an investor. Similarly you know we spoke a bit earlier about the passive investing. Now passive investing I always say jokingly that I don't know if it classified as investing because you're putting your money in there and you are investing in the things by virtue of their size the proportion that you're investing in is just by virtue of their size. Now the passive investing actually perpetuates the situation because a company A gets bigger now you have to allocate more money to company A but what you need to do you need to sell company BCD in order to put more money into company A so what do you do? Supply and demand you know economics 101 when you have more demand for something the price has to go up when you've got less demand price goes

1:12:19so the prices of companies BCD up to Z go down because people are selling frantically the the the passive investors in order to buy company A so company A's share price continues to rise therefore it becomes a bigger component of the market then you have to do the same thing again but all the while that company hasn't changed in terms of its underlying characteristics it's still going to generate a hundred grand of profit but now you paying a thousand grand for it hey all of a sudden I'm paying a thousand five hundred grand for it and all of a sudden I'm paying two thousand grand for it for the same hundred grand and so there hasn't the characteristics of the company haven't fundamentally changed it's just the prices changed but even that price has changed by virtue of just almost like mechanics as opposed to investment fundamentals or capitalism the rich get richer. So what do you do then if you're looking at the JSE and you think ah it's it's it's over concentrated I'm going to take my money somewhere else and I mean a lot of people

1:13:21now you're smart money you'd you'd go to the US right don't you come across exactly the same problem and I find it amazing because of the sheer size of US stock markets that they can become over concentrated in the way that that maybe they are true you know and just the point that you just raised a very important point and I think if you interrogate that point further then maybe it might give us that uncomfortable question that this model of the specification probably is fought the formula this flawed the formula that we've been using just like the issue of high risk I retain but yes the specification is not only about companies themselves as equities you might now say to better diversify let me look into a different asset class you know because equities as we are say when the JSE as you guys said that is a self-fulfilling prophecy then unfortunate using the current formula the more the company grows bigger than unfortunately we have to keep on putting money into it so that you balance that remember as well other than the mandate itself we get to be covered by stuff like a regulation 28 you know that the setting percentage you cannot have more than

1:14:26x percentage in whatever so it's well and good if you can have an exposure to the global economy and by not just looking to the US but looking to the other parts of the world and definitely you can get great growth we like to get about the US as an example look what is happening with their Korean market the Cosby it's driven mainly by two companies yes yeah Sam saying enough to get the other but I mean it's okay yeah yeah I mean it's it's incredible okay so that's under I mean JSE is over concentrated South Korea is over concentrated the US is over concentrated what do I do do I go and look for you know small economies do I go to South America where do I go do I got a Canada there's a good idea right now well yeah the eurozone the Canada you know you've got in fact today I actually had somebody come see me who is it's an asset manager that invents an Iran would you believe you know 700 companies in that stock markets

1:15:28and of course the valuations are just sort of cheap but I think the point is exactly is that you know diversification does demand that an investor does take a bit of energy in efforts in terms of seeking out opportunities look you don't have to look far you know there are some really good companies locally I mean we've got you know lost we're going to go see a company called Reignit and they produce some of the most amazing world-class global defense systems and fuses and equipment of the in that space they've got all the old company very old company but because now of the fractured nature of the global economy everybody's is sort of warming up and and canning up and and droning up all of a sudden they've got you know a lot of runway and opportunity so as I say I think even in the local economy if you spend some time and look and investigate you you will find things that can help you to diversify a Sunday not yet thank you very much indeed Chief Investment Officer at Marzi

1:16:29Acid Management, Makware Masalela of course is the founder and Chief Investment Officer of Makware Find Manages over concentration in the JSC over concentration in the US you know what the investment school calls for but over concentration from time to time this available as a podcast if you want to concentrate on it again you're listening to the money show with Stephen Curtis brought to you by Absor Business Bank connect with the team that understands the lay of your land at Agri Business at Absor.co.cd Well I'm afraid higher oil prices still weighing on US markets I think also they're higher than expected producer price inflation numbers having an impact there too perhaps feeding into some interest rate expectations the Dow Jones is down 0.68% the Nasdaq is down nearly half a percent the S&P 500 down 0.54% so yeah investors taking a bit of a negative turn I'm afraid I'm off tomorrow my tail her repay will be with you for the money show there'll be lots to look forward to

1:17:31them I'll see you on Monday good evening it's edilock