By Prabashini Moodley
| We’ve been eagerly awaiting the implementation of the Two-Pot system and are glad the moment is finally here. There’s a lot of work still to be done with early access to the Savings Pot now a reality, but with the huge improvements Two-Pot will make to South Africans’ retirement savings, we diligently do it, as we believe it will all be worth it for retirement fund members and the industry as the system matures. |
| The Two-Pot system is undoubtedly a landmark point in retirement reform that will transform lives in future, and it’s happening at the same time as some other positive changes in South Africa. |
| We’ve passed 190 days without loadshedding, and we’re already hearing talk of a load-shedding-free summer. Apart from the general psychological impact this has, it’s also great news for the economy and consumers who are financially stressed in so many ways. |
| The country is also enjoying the lowest inflation rate of the past decade, which is already positively affecting interest rate adjustments this year. |
| As my colleague Izak Odendaal, Chief Investment Strategist at Old Mutual Wealth, explained at one of our webinars, these developments aren’t happening in isolation, but together with several other decisive moments on the international stage that make us optimistic about the rest of the year (see why I say it’s all connected?). |
| Global inflation, though still uneven, is slowly coming down, and central banks can now start thinking about a broader economic outlook instead of just how to curb inflation with high interest rates. Importantly, the global economy managed to get inflation down without hurting consumption and market activity too much. That’s good news for economic activity and investments in 2024, and indebted consumers no doubt. |
| Against this backdrop, we’re seeing South Africa’s interest rate cycle take a downward turn. Anyone with a bond is surely happy about that, but it’s also good news for retirement investments because it frees up more money in more pockets to turn into retirement savings rather than service debt. |
| Interestingly, excitement around artificial intelligence has been a huge value driver when it comes to equities. AI continues to be a buzzword, and it’s fascinating to see how its development is also leading to growth in equities, especially in the tech companies developing this technology. |
| The buzz around it in the markets won’t last forever, but it’s good to see the markets responding positively to this technology that can change the world in so many ways. |
