Value Investing Training in Johannesburg, South Africa
How’s everyone doing! I just completed a value investing course in Johannesburg. This is my first time conducting training in South Africa. The nation is such a beautiful place with great weather and filled with amazing nature sights.
Back to the value investing course, it’s been a great success! The students are highly motivated and they are so hungry for financial knowledge and ability to improve their financial situation. Their energy was so high and desire was so strong that we decided to conduct a night session for them after the three-day training. So happy to see that the people of South Africa learning and working hard for their financial freedom.
Other than training the South Africans, I also learned a lot about the Johannesburg Stock Exchange (JSE). In fact, JSE is the biggest stock exchange in the Africa continent and it has over 400 stocks. Interestingly, there are many global brands here such as Woolworths (supermarket), SAB Miller (alcoholic beverages), British American Tobacco (tobacco products), and Vodacom (telecom).
Reflecting on this experience, a few key points came to mind.
- Interest Rates is Important – In South Africa, the annual interest rate for fixed deposit is about 7-8%. That’s amazing! In comparison, Singapore’s annual interest rate is ~1%. However, this means that their loans are really expensive. Imagine, the amount of interest you would have to pay if you take up housing loan for 8% annual interest rate.
- Value Investing Works in All Market – To contextualise the training, we wanted to use local examples that they can relate to, so we applied our value investing methods to the stocks in JSE. To be honest, I wasn’t too optimistic at first as the JSE market is quite young so value stocks may not be widely available. However, to my surprise, there are actually more gems than I can find in Singapore! The main point is that value investing works in all market, be it mature or young. (I wish I could invest in JSE but they don’t allow me to open a local account.)
- Currency Risk is Real – While the JSE stock market is vibrant and full of investing opportunities, we must bear in mind the currency risk. Since I’m based in Singapore, I need to beware of the currency risk between SGD and South African Rand (ZAR). To give a perspective of the risk, 5 ZAR could exchange for 1 SGD in 2012, however you need 10 ZAR to exchange for 1 SGD in 2016. While this may be good news for a tourist, it is an absolute nightmare for SG investors in South Africa as your investment would have reduced by 50% in value over the last 4 years.
If you want to find out more about value investing, drop me a comment below!
See you soon!
Investing Always,
Pete
