Market Indicators
- JSE All Share (ALSI) 58,528.40
- Rand/Euro R 16.04
- Rand/Pound R 18.67
- Rand/US Dollar R 14.33
- Rand/Aus Dollar R 10.08
When Economics Meets Politics
Fund managers have historically taken little notice of potential political outcomes when building their investment portfolios and in our fund research, we have seen little evidence of value being added to portfolios over time through trying to forecast these types of events. Fund managers talk about “ignoring the noise” and focusing on the fundamentals impacting a specific asset or asset class, rather than who wins an election or any tweak in government policy. The theory is that good businesses have found a way to work through changes in the political landscape. However, it appears that politics has become far more entwined with economics in recent years and political decisions are starting to impact directly on economies, equity and bond markets, business sectors and even specific companies. So, is it really possible to focus purely on the fundamentals of a particular business – its earnings, its growth potential – without thinking through the impact politics may have?
