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Saturday, November 1, 2008
Coming together

Tough regulation in South Africa’s financial services sector combined with ongoing exchange controls has saved many companies from themselves that might otherwise have followed a greedy path to offshore diversification and ruin.
Leon Campher, CEO of the new Association of Savings and Investment South Africa (ASISA), says that while the country is certainly feeling the heat generated by the turmoil in the global financial markets, it has been spared the worst excesses – at least for the moment.
“There has been no evidence suggesting that any of our banks or financial institutions may have to be bailed out as has been the case in the US and Europe. Our financial service sectors are well regulated and we have yet to see evidence of undue stress in any of the sectors.”
Campher acknowledges that pain is nevertheless felt by many investors who have seen the value of their savings decline considerably. But he reminds them that this is not the first bout of volatility markets have suffered and that this will neither be the last.
Campher recalls a couple of occasions when world markets tumbled significantly, the most memorable being Black Monday, the biggest one day stock market crash in history that took place on 19th October 1987, when the Dow Jones shed 22.3% or US$500-billion in value in a single day. This stock reverberated around the globe, including South Africa.
He says since then central banks have had to step in on several occasions to rescue their respective financial markets. “Times of extreme volatility do not dissipate the need for savings and investment. They do, however, highlight the need for solid financial planning.”
Campher adds that clients who are invested in line with a well constructed long-term financial plan have much less to worry about than those who have poured all their money into their neighbour’s favourite stock of the day.
“If your investment portfolio is well diversified and if you have a long-term view the currently volatility should not cause you sleepless nights. And if you are worried, this is not the time for panic driven decisions. If you quit equities now, you turn paper losses into a grim reality.”
He says that equities havn proven over time that they will always outperform all other asset classes eventually. Therefore, he says, investors should think twice before cashing in on their shares, including their pension money, while equities are down.
He says investors who have come to realise that their investment strategies may have been misguided should consult a qualified financial adviser before making any decisions. Often, he says, all is not as bad as it seems once things have been put into perspective by an expert.
Footnote: ASISA represents the majority of South Africa’s asset managers, collective investment scheme management companies, linked investment service providers, multi-managers, and life insurance companies. The association was formed this year by members of the Association of Collective Investments (ACI), the Investment Management Association of South Africa (IMASA), the Linked Investment Service Providers Association (LISPA) and the Life Offices’ Association (LOA).
The chairman of ASISA is Johan van Zyl, and ASISA’s Chief Executive Officer is Leon Campher. It officially opened its doors on 1st October, after the Association of Collective Investments (ACI), the Investment Management Association of South Africa (IMASA), the Linked Investment Service Providers Association (LISPA) and the Life Offices’ Association (LOA) disbanded and transferred their staff, assets and activities to ASISA.

Copyright © Insurance Times and Investments® Vol:21.10 1st November, 2008
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