The CEO of investment and insurance holding company PSG Financial Services, formerly known as PSG Konsult, says National Health Insurance (NHI) is the elephant in the room of efforts to reform SA’s economy.
CEO Francois Gouws said the time had come for the government to implement business friendly policies and legislation.
“Legislation that is causing a lot of uncertainty is NHI. The issue there is that it has not been costed and there is no funding forecast that has been made. It is also being pushed through against a backdrop of significant budget deficit and high government debt levels,” Gouws said.
“The market reacted positively to the formation of the government of national unity (GNU) after the recent national elections. This may be indicative of cautious optimism about improving consumer and business confidence in the country. However, uncertainty remains and clear signals are needed to show that sustainable economic growth will be prioritised.
“Policy reform and a legislative agenda that is conducive to economic growth are sorely needed. The process should include thorough social and economic impact studies, to allow for the practical financial implications of the policy choices to be discussed with the various stakeholders.”
Gouws comments come as the group on Thursday reported robust interim results, with 28% increase in recurring headline earnings per share and a return on equity of 26.2% in the six months ended August.
The company reported a 15.9% increase in total assets under management to R435.7bn. The assets under management are comprised assets managed by PSG Wealth of R379.1bn, which increased 16.4% in the period under review and PSG Asset Management which ticked up 12.4% to R56.6bn, while PSG Insure’s gross written premium amounted to R3.7bn, an increase of 10.3%.
Gouws said the results came in an environment characterised by continued low levels of economic growth, which remains a seemingly intractable problem, resulting in stagnated economic development which in turn worsens social issues such as crime and corruption.
“The SA economy recently experienced less disruption from load-shedding and saw a slight improvement in GDP growth during the period under review,” he said.
“The firm remains confident about its long-term growth prospects, and we therefore continued to invest in both technology and people. Compared to the prior comparable period, our technology and infrastructure spend increased by 20% (these costs continue to be fully expensed), while our fixed remuneration cost grew by 14%. These factors had a muted impact on our operating margins.
“We are proud of the progress made in growing our own talent, with 77 newly qualified graduates having joined during the six-month period.”
A survey on behalf of Bank of America (BoA) conducted by research firm Ipsos last month found a record number of fund managers expect the GNU to implement “meaningful reforms” that could see the local markets deliver returns in excess of 10% over the next 12 months.
The BoA global research SA fund manager survey found that asset allocators expect an average return of 17% on equities in the coming year, 8% for cash holdings and 13% on government bonds maturing in 2035.
Asset manager Old Mutual Investment Group (Omig) has said that despite the JSE reaching record highs after the general election in May, foreign investors are still taking a wait-and-see approach to local markets.
Omig said for the pendulum to truly shift on foreign investor sentiment, investors would need to see more movement around improved performance from state-owned enterprises, alongside a stable centrist GNU and sound policymaking, which would unlock value in local financial markets.
Correction: October 18 2024
It was incorrectly stated in a previous article that recurring headline earnings per share rose 280%. The correct figure is 28%. We regret the error.
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